The Australian Securities and Investments Commission (ASIC) has cracked down on consumer debt management companies claiming to be ‘Government Approved’ when they’re not.
The companies assist customers struggling to pay their debts by providing a range of services including bankruptcy advice, informal debt agreements, debt consolidation and formal debt agreements.
Deputy Chair of ASIC, Peter Kell said three companies – Capital Debt Solutions, Debt Assist Aust and Bankruptcy Experts – had either paid an infringement notice or removed misleading statements from their advertising in response to ASIC’s actions.
“Recommendations and statements, like ‘Government Approved’ can have a strong influence when vulnerable consumers in financial hardship are seeking help with their debts,” Mr Kell said.
“Firms must ensure their marketing materials and promotional statements are based on fact.”
He said that following ASIC raising concerns, Capital Debt Solutions had removed false claims from its website, claiming it was “trusted and recommended by more than 6,000 Australians” when there was no basis for this claim.
Capital Debt Solutions and Debt Assist Aust. had removed false statements online, claiming their debt agreements were ‘Government Approved’ and Bankruptcy Experts had removed testimonials on its websites from customers that were unable to be substantiated.
“Although debt agreements and debt administrators are regulated, this does not mean they are ‘approved’ by the Government,” Mr Kell said.
He noted that compliance with the infringement notice was not an admission of guilty or liability, and Capital Debt Solutions was not taken to have contravened the ASIC Act.
