IVA : R3 Calls For New Debt Management Regulations

As members of the Insolvency Practitioners Association (IPA), 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. Take a moment to read the report and give us your thoughts. 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 agreements are an informal arrangement with creditors which do not have to be put forward by a licensed Insolvency Practitioner. As such, there is little or no regulation and monitoring of these agreements or the companies which manage them. Some of the companies will carry out both debt management and Individual Voluntary Arrangements (IVAs). Only when the formal Individual Voluntary Arrangement (IVA) is processed and a license Insolvency Practitioner appointed does regulation start to bite. There has been an upsurge in Debt Management companies administering Individual Voluntary Arrangements (IVAs), with concerns that some may have been mis-sold to individuals, in particular those who are reliant on state benefits for their income. Individual Voluntary Arrangements (IVAs) are an alternative to going Bankrupt, they have been a practical procedure since the introduction of the Insolvency Act 1986, but recently due to the increase in personal debt there has been a massive uptake in Individual Voluntary Arrangements (IVAs). (11,105 in the second quarter of 2006 with a 153% increase). Individual Voluntary Arrangements (IVAs) must be administered by a licensed Insolvency Practitioner who is subject to stringent regulation and monitoring. One of the main advantages being that a person does not face restrictions of bankruptcy. An Individual Voluntary Arrangement (IVA) allows people in financial trouble to repay their debts over a period of time and at a rate negotiated between debtor and creditors. Tony Supperstone, R3 President and consultant at DBO Stoy Hayward, said: “The level of personal debt has rocketed and Individual Voluntary Arrangements (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/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 agreement, Individual Voluntary Arrangement (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: Pamela Shabi R3, the Association of Business Recovery Professionals Communications Manager