ASIC takes action against Solve My Debt

A woman whose advice on debt management has been frequently published in financial planning and mortgage broking trade magazines is now the subject of legal action initiated by the Australian Securities and Investments Commission (ASIC) over concerns of substantial consumer harm.

The woman is Dr Merrilyn Mansfield, who is a director and co-owner of Bakken Holdings Pty Ltd which is the operator of debt management business Solve My Debt Now.

ASIC is alleging customers of Solve My Debt Now were in financial hardship and often had, or were about to, default on credit facilities such as personal loans and credit cards. Solve My Debt Now offered to manage their debt by collecting funds from them, on-paying their creditors and negotiating with creditors to reduce debt. In many cases, Solve My debt Now failed to pass on its customer’s payments to creditors in a timely manner or at all.

ASIC claims that from April 2020 to June 2022, Bakken collected $3.6 million from its customers but paid only $1.1 million of this money to creditors. 64% of customers did not have payments made to their creditors at all.

ASIC also alleges that in many cases, the fees Solve My Debt Now charged for its services exceeded the amount the debts were reduced, leaving clients worse off. Only 5.3% of Solve My Debt Now customers achieved a debt reduction after fees.

The regulator said it was also suing Mansfield for her involvement in some of the alleged false and misleading representations made by the company when it made promises to manage and reduce consumer debt.

ASIC alleges that from April 2020 to June 2022, Bakken:

• engaged in a system of conduct or pattern of behaviour which was, in all the circumstances, unconscionable;
• made false and misleading representations to customers about the benefits and qualities of its service; and
• carried on a financial services business without the appropriate licence.

ASIC has previously warned credit providers and debt management companies that strong, targeted action against predatory lending, high-cost credit and misconduct impacting consumers experiencing financial difficulty was expected as part of ASIC’s continuing focus on protecting consumers.

ASIC is seeking declarations, pecuniary penalties and a disqualification order from the Court.

The proceeding is to be listed for case management on a date to be determined by the Court.