The following is the text of a press release we issued this week:
UK Insolvency Compliance Reviewer sparks IVA Debate
Compliance On Call, a leading UK insolvency compliance reviewer, has issued an article to stakeholders in the IVA process aimed at sparking debate on the future regulation and administration of consumer debt IVAs. The aim of the debate is to ensure that regulators, insolvency practitioners and major financial institutions take urgent action to protect the interests of debtors and creditors in the face of the booming consumer debt market.
IVAs are an alternative to going bankrupt and they have recently come to prominence due to the increase in personal debt and aggressive marketing by both insolvency practitioners and those who historically dealt with debt management agreements and non-prime lending. R3, The Association of Business Recovery Professionals, said in a recent press release that “There has been a massive uptake in IVAs. (11,105 in the second quarter of 2006 with a 153% increase) 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 IVA allows people in financial trouble to repay their debts over a period of time and at a rate negotiated between debtor and creditors.”
Compliance On Call helps insolvency practitioners monitor their compliance with statutory and regulatory obligations and is therefore ideally placed to have an overview of the whole IVA process and encourage debate from an independent standpoint. The article released today encourages all of those involved in promoting, regulating and voting on IVAs to take a proactive approach to the challenges facing the consumer debt market and to consider five key areas:
• The regulatory approach to volume IVA processors.
• The approval of IVAs and use of bank proxies.
• What is an ‘acceptable’ level of debt forgiveness?
• ‘Best advice’ in the IVA sector.
• Co-operation and competition – the way forward for IPs and creditors who deal with volume IVAs.
Gareth Limb, director of Compliance On Call and former head of ACCA’s insolvency monitoring unit and of IPCU, the Insolvency Service’s unit responsible for monitoring insolvency practitioners, said:
"With over £200bn in unsecured consumer debt in the UK, this sector threatens to become more significant than any other area of insolvency. The existing legislative and regulatory framework is at risk of being unable to manage the expected growth in insolvent individuals. We welcome R3’s call for corporate authorisation to regulate the entrepreneurs behind large IVA providers, but we believe that there are several equally important issues that must be addressed not only by those within the insolvency profession but also by the financial institutions who carry the majority of votes at IVA approval meetings."
Anyone who has a stake in the IVA process and would like to read the full article issued by Compliance On Call should email Bill or Gareth. (It is not safe to show the addresses on a Blog, but if you are in the insolvency business and reading this page, you will know how to find us.)
