PracticeConsultingR3 hits out at debt cowboys

R3 hits out at debt cowboys

Insolvency experts are calling on the government to crack down on rogue insolvency practitioners after a debt consultant was exposed posing as a qualified member of the profession.

R3, the Association of Business Recovery Professionals, wants tighter rules after the BBC television programme Hard Cash this week exposed a Yorkshire consultant who falsely claimed his firm had ‘licensed insolvency practitioners’ who could ‘administer individual voluntary agreements’.

The consultant told a presenter posing as a possible bankrupt an IVA was the solution to her problems and ‘if the creditors agreed to IVA, which they will, then that’s it, it’s cut and dry’. He advised her to use a credit card to pay for his services – an offence in UK law.

Roger Oldfield, president of R3, said: ‘Cowboy debt advice is a massively growing problem.’

He added the association was pressing for tougher sanctions by lobbying the DTI. ‘The government should take this seriously,’ he said. ‘They’re keen on the rescue culture but false insolvency practitioners are failing them.’

Former R3 president Stephen Gale, was interviewed for the programme: ‘Inquiries reveal he’s not a licensed practitioner and we don’t think any of the partners in this firm are.’ He added the consultant was not helping the bankrupt but attempting to intimidate her into buying his service for £14,000.

Gale told Accountancy Age such behaviour was bringing the procedure of IVAs into disrepute. ‘It is disgraceful conduct and had that person been an insolvency practitioner they would have been struck off.’ He added: ‘In specific circumstances an IVA can resolve someone’s problems and avoid them going into bankruptcy.’

As it is only an offence to take an appointment but not to pose as an insolvency practitioner, R3 cannot take legal action. Oldfield said: ‘The Office of Fair Trading should be after him because he’s not acting in the public interest.’

In the programme, the Citizen’s Advice Bureau said many new debt counsellors advise people to use IVAs inappropriately. Oldfield added: ‘The CAB is uncomfortable and is asking questions.’

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