FCA warns of debt write off scams

The Financial Conduct Authority (FCA) has warned that unauthorised claims management firms are targeting consumers with ‘write-off debt’ schemes which could leave them paying fees even if they’re unsuccessful.

The unauthorised claims management services say they can write off debts but often charge fees to do so, even when the scheme fails. These firms offer to ‘write off’ debts, mainly mortgages, and get compensation for consumers from their lenders. This might include reclaiming past payments of capital and interest.

The firms often charge a fee to do this and might add more fees even when the scheme fails. This can lead to significant losses for those involved.

The firms might try to convince individuals by pointing to ideas such as ‘Strawman’, ‘Freeman of the Land’ and ‘Sovereign Citizen’. These ideas promote the belief that the government and laws of a country have no powers over people.

Fraudsters use these ideas to appeal to people facing financial difficulties who may be looking for a way out of their debt.

The FCA says individuals should be cautious of any firms offering to write-off debt. These scams often increase in times of economic hardship and can involve vulnerable victims who are already struggling with money.

Anyone who uses an unauthorised firm will not have access to the Financial Ombudsman Service to deal with complaints and no protection will be offered by the Financial Services Compensation Scheme (FSCS) if things go wrong. This means you’re unlikely to get your money back if a firm fails.

The FCA added that anyone who stops making repayments on their debts could face action from their lender. This could include debt recovery and repossession of your home.

Consumers are being urged to check the Financial Services Register to make sure the firm is authorised and has permission for the service it’s offering you.