New Insolvency Service guidance published today (5 February 2021) on monitoring
insolvency practitioners, making them responsible for advertising by the firms and lead generators who introduce customers to them, is very welcome.
The guidance reflects recent rulings from the Advertising Standards Authority on misleading advertising in the sector as well as concerns raised in the Woolard report for the Financial Conduct Authority.
However, it is important to recognise that the new requirements, welcome as they are, are unlikely to go far enough to protect consumers fully from harm, since the new approach relies to a high degree on a reactive approach to problems after they have been identified.
What is most needed to protect consumers is to prevent misleading lead generation activity in the first place.
Richard Lane, Director of External Affairs here at StepChange, said:
“Last week, the Advertising Standards Authority upheld complaints that clearly showed the severity of the problems we’ve been seeing for far too long, with misleading advertising leading people to poor quality advice and potentially the wrong debt solution for their needs.
"This new guidance, with more stringent monitoring and better co-ordination between regulators, is obviously very welcome. However, even under the new guidance there’s a risk that the approach could be one of shutting the stable door after the horse has bolted, as it remains largely reactive, dealing with poor practice after the event.
"What we also need to see is explicit statutory regulation to prevent misleading lead generation advertising in the first place.”