Submission: Debt agreement administrators’ guidelines relating to advertising
Consumer Action’s MoneyHelp financial counselling practice helps disadvantaged, low income Victorian consumers who are experiencing severe financial distress consumers Victorians, some of who have used debt agreements.
The combination of disadvantage and financial stress makes this consumer segment particularly vulnerable to deceptive advertising claims that overstate the potential benefits of a Part IX agreement, and fail to mention other debt options that may in fact be in the client’s best interest.
It stands to reason that the vast majority of consumers who enter debt agreements would be considered financially stressed and vulnerable. MoneyHelp clients who are in debt agreements often do not have an asset, such as a home, to protect. It is not clear why they have chosen to take a debt agreement when bankruptcy may have been a superior option for them; indeed, when these clients speak to an independent financial counsellor (rather than a firm that has a financial incentive to promote an unsuitable solution) the advice often given to those clients involves entering bankruptcy. Accurate and honest advertising of debt agreements is crucial to ensuring that consumers aren’t mislead and prompted to enter into a debt agreement (or any other act of bankruptcy) without full understanding of all their options and their consequences.
A full copy of our submission is available by clicking: Debt agreement administrators’ guidelines relating to advertising.