Debt management firm goes under owing clients thousands

Wednesday 30th November 2011

With more than £600,000 owed to consumers, liquidators have been called in to investigate Somerset-based debt management firm DebtDr, which ceased trading in April.

Financial experts often referred clients to DebtDr, which helped customers pay off their creditors for a fee and frequently asked for a lump sum in order to offer creditors a full and final settlement.

Clients often had to borrow the money to hand over to DebtDr to use whilst negotiating with creditors.

After the company ceased trading, the money was not returned to the clients. Jeremy Hockley, who is a former bankrupt himself, ran the company as the trading name of Hermes Financial Solutions Ltd. He has so far failed to account for the whereabouts of his clients’ money.

One client who is still owed money is Carol Gould, 58, who handed over £21,500 of critical illness insurance she received after being diagnosed with cancer.

The money was supposed to be held in a protected client account.

“I don’t think I will ever see my money and I don’t think anyone else will,” she told the BBC.

“Basically, I’m penniless now because of DebtDr so I am afraid I have to say, in a way, they wrecked my life.”

According to the most recent filed accounts, the company’s asset deficiency amounted to nearly £490,000.

Jon Law, the liquidator, told the BBC: “This investigation has now substantially completed and it is clear that around £600,000 of client money belonging to more than 80 clients of the company has been used improperly and is no longer held by the company.”

During yesterday’s Business, Innovation and Skills (BIS) Committee’s second evidence session on debt management – which included discussion from Richard Wharton of DEMSA, Andrew Smith of DRF, Melanie Taylor of Gregory Pennington, Chris Davis of MoneyPlus Group and John Fairhurst of PayPlan – the company was mentioned.

Richard Wharton highlighted that the protection of client account money needs to have more emphasis placed on it by the OFT, whilst Andrew Smith stated that if a more stringent audit of clients’ accounts had taken place client money would not have been lost by DebtDr or another company which is no longer trading, Apex.

Melanie Taylor suggested that insurance protection would be the best way to ensure clients are able to get their money back even if companies cease trading.

BBC1 broadcast an in-depth investigation into the company on 28 November at 19:30 GMT.