R3 calls for new Debt Management regulations
As our company missions statement declares, My IVA Adviser are genuinely interested in making sure that people seeking help for debt problems are given accurate advice from the outset.
R3, the Association of Business Recovery Professionals, has issued this press report (below) high-lighting regulation issues with debt management companies.
R3, the Association of Business Recovery Professionals is calling for more regulation of debt management companies to protect the public from misleading and bad advice on the options facing people in financial difficulty.
Debt Management Plans are informal arrangements and, as a result, they do not have to be administered or regulated by a licensed Insolvency Practitioner. As such, there is little or no regulation and monitoring of these agreements or the companies which manage them.
Whilst some debt management companies will provide both debt management and IVAs services, it's only when the IVA is processed, and a license Insolvency Practitioner appointed, that the regulations are applied.
Recently, there has been an upsurge in debt management companies promoting IVAs, with concerns in the industry that some companies may have been mis-selling IVAs to individuals, in particular those individuals whose income is reliant on state benefits.
IVAs are an alternative to bankruptcy and they have been a available since the introduction of the Insolvency Act 1986.
It is only recently, due to the increase in personal debt in the UK, there have been a significant increase in IVA numbers. (11,105 in the second quarter of 2006 represented a 153% increase on the quarter).
IVAs must be administered by a licensed Insolvency Practitioner who is subject to stringent regulation and monitoring. Two of the main advantages of an IVA being that the applicant avoids the restrictions of bankruptcy whilst being allowed to repay their debts over a fixed period of time.
Tony Supperstone, R3 President and consultant at DBO Stoy Hayward, said "The level of personal debt has rocketed and IVAs have followed this trend, this is not due to the relaxing of regulation on bankruptcy but due to the easy availability of credit. The increase in aggressive selling of Individual Voluntary Arrangements (IVAs) is no different to the hard-hitting marketing of credit. The consumer is bombarded with offers of unsecured credit, with little consideration as to how the consumer will repay or manage his or her debts."
Tony added: "We are urging the regulation of Debt Management companies to ensure that members of the public are fully aware of all their options, be it a Debt Management Plan, an IVA or indeed bankruptcy.
"We welcome the news that Insolvency Practitioners Association (IPA) are seeking to develop a kite-mark for debt management companies - we think this will assist greatly in the reputation of this advisory side of the market."
"We would also like to see corporate authorisation to regulate the entrepreneurs behind large Individual Voluntary Arrangement (IVA) providers. At the moment, the owners of the business are not monitored and regulated to the same extent as the insolvency practitioners actually administering the Individual Voluntary Arrangements (IVAs)."
"All the debt management companies that follow a proper code of conduct will welcome regulation".
Further information please contact:
R3, the Association of Business Recovery Professionals