Insolvency Service findings highlight continued poor practice in the IVA market
National Debtline responds to findings from the Insolvency Service showing poor practice in the Individual Voluntary Arrangement market
Posted October 17, 2024
National Debtline has responded to findings from the Insolvency Service on the administration of Individual Voluntary Arrangements, a form of debt relief.
The findings reveal that, of the IVAs investigated by the Insolvency Service, 60 percent showed evidence of poor practice. Of these:
- 75 percent did not include adequate affordability checks before the IVA was undertaken.
- In more than half of cases (51 percent) with poor practice, steps were not adequately taken to ensure the customer understood the terms of the IVA.
- And in 45 percent of these cases, insolvency practitioners were found to have wrongly disregarded other potentially more suitable insolvency options, such as Debt Relief Orders.
Leading debt advice charity, National Debtline, says the findings highlight the significant issues that remain in the IVA market, with people being pushed towards unsuitable IVAs, risking further financial difficulty. National Debtline is calling for the Insolvency Service to introduce new rules to ensure people receive free, independent debt advice before entering an IVA.
Grace Brownfield, head of influencing and communications at the Money Advice Trust, the charity that runs National Debtline, said:
“These findings show the prevalence of poor practice that still exists within the IVA market, and the harm this can cause for people experiencing problem debt.
“IVAs are one insolvency option, but they aren’t suitable for everyone. Entering into an IVA when there is a more suitable insolvency option available, such as a Debt Relief Order, risks pushing people into further financial difficulty.
“Insolvency options should not be undertaken lightly, and it is crucial that people receive free, impartial debt advice before deciding the best course of action to take.
“National Debtline is here for anyone worried about their finances, with free, independent advice. Our expert advisers offer advice tailored to anyone’s circumstances, to help you find the right next steps to resolving your debts.
National Debtline provides free, independent, expert advice. Contact National Debtline for free on 0808 808 4000 or via www.nationaldebtline.org