£250,000 damages for ClearDebt
DEBT adviser ClearDebt has received £250,000 in damages and costs after it sued over claims it mis-sold individual voluntary arrangements.
The Timperley-based company, which sued for libel, malicious falsehood and causing loss by unlawful means, is understood to be one of several individual voluntary arrangement companies whose clients were targeted by an organisation called the IVA Council.
The IVA Council sent out letters urging people in debt to stop paying into individual voluntary arrangements (IVAs), which allow debtors to reach a repayment agreement with their creditors.
Those who responded were then referred directly to UK Bankruptcy Ltd, a company that charges over £1,000 to provide bankruptcy advice and assistance to those in IVAs.
Sean Mason and Tobias Gooden, both directors of UK Bankruptcy Ltd, and William Lindley and Shane Mulroy were all allegedly behind the operation of the IVA Council.
As part of the settlement they apologised and admitted the IVA Council was not a non-profit organisation or a consumer action group as it claimed and that allegations it made that ClearDebt was an “IVA factory” and had repeatedly mis-sold IVAs to its clients were unfounded.
David Mond, ClearDebt chief executive, said: “ClearDebt was set up because I believed IVAs were the best and fairest deal between debtors and creditors.
“We took this action, on our own and on our industry’s behalf, because we believed the IVA Council were preying on many people who were striving to deal with their debt and who had been found the most appropriate solution to their needs.”
Earlier this month, Mr Mond said the company would benefit from economic conditions as more people struggle with debt and sign up to IVAs.
He said: “With the number of IVAs and debt management plans growing, good pipelines, and the current economic conditions suggesting a constant flow of new enquiries to our website, we have every reason to believe that we will continue to be busy.”
ClearDebt had 247 IVAs passed during the financial year to the end of June 2008, a 21% increase on the previous 12 months. It made losses of £697,000, up from £657,000 last time, while revenue rose from £420,000 to £1.87m.
Halliwells’ dispute resolution team, led by partner Julian Diaz-Rainey, acted for claimants Mr Mond, Hodgsons Chartered Accountants and Cleardebt. Halliwells instructed Justin Rushbrooke and Richard Munden from 5RB and Louis Doyle of Kings Chambers to act for the claimants.
