The FCA said it believes there are firms offering unauthorised claims management services to people in the UK, offering 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 FCA said the firms might try to convince individuals by pointing to ideas such as “straw man”, “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 said.
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.
Almost all firms and individuals offering, promoting or selling claims management services in the UK must be authorised or registered by the FCA.
The firms offering the services above are unlikely to be authorised by the FCA and are targeting people in the UK. This is against the law.
If you use an unauthorised firm, you will not have access to the Financial Ombudsman Service if you have a complaint. You also will not be protected by the Financial Services Compensation Scheme (FSCS) if things go wrong. This means it’s unlikely you would get your money back if the firm fails.
If you stop making repayments on your debts, you could also face action from your lender. This could include debt recovery and repossession of your home.
If a financial firm is authorised or registered, it gives you greater protection if things go wrong. Check the Financial Services Register to make sure the firm is authorised and has permission for the service it’s offering you.
If you’ve been contacted unexpectedly by a business or individual, make sure you call them back using the contact details on the FS Register.
Find out more about how to protect yourself from scams.
