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Misleading loans promises firms face 'government action'
Claims management companies are to be investigated to making misleading promises to indebted customers, the Ministry of Justice has said.
According to the government department, firms who are using false advertising should stop or they will "face action".
The firms work by offering debtors the chance to write off some or all of the money they own, by lodging a claim with card or unsecured loan providers.
However, some have been accused of offering impossible-to-fulfill guarantees of success.
Justice minister Bridget Prentice commented: "Vulnerable people facing debt problems need help and support.
"We would urge anyone who is considering using a business offering such services to think carefully and seek independent advice before making any final decisions."
Ray Watson, Office of Fair Trading director of consumer credit, added: "Businesses should also be aware that if they offer debt counselling or debt adjusting services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution."