The Financial Conduct Authority (FCA) is warning consumers to be on their guard against scams offering to wipe out debt, mainly mortgages, and get compensation from lenders.
It said these schemes may include reclaiming past payments of capital and interest.
They often charge a fee for the legwork and might add more fees when the scheme fails.
The FCA said this can lead to “significant losses” for those involved and said consumers should be cautious of any firms offering this service.
It said these type of scams often increase in times of economic hardship and can involve vulnerable victims who are already struggling with money.
They may try to convince individuals by pointing to ideas such as ‘Strawman’, ‘Freeman of the Land’ and ‘Sovereign Citizen’ suggesting that the government and laws of a country have no powers over people.
Avoid unauthorised firms
The watchdog noted that almost all firms and individuals offering, promoting or selling claims management services in the UK must be authorised or registered by it.
As such, these ‘write-off debt’ schemes are unlikely to be authorised and are targeting people in the UK which is against the law.
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.
The FCA added that for anyone who stops making repayments on their debts could face action from their lender including debt recovery and repossession.
