Please select a page from the Report Members of the Insolvency Practices Council Chairman's Report Review of Activities during the year Personal Sector Issues Commercial Sector Issues General Issues Future Plans Progress of Recommendations 2000, 2001 Recommendations Glossary Acknowledgments

Personal Sector Issues

Debt Management Companies
The main concern in relation to the personal sector is the managing of personal debt by debt
advisers and debt management companies (DMCs) which are in effect unregulated. In 2002 the OFT issued guidelines to the debt management companies to create some form of self-regulation. A recent survey by the Consumers Association asserts that these guidelines are not being followed and that the OFT does not have the resources to monitor them.

The IPC becomes concerned when insolvency practitioners are involved with debt advisers and debt management companies. It is important that all insolvency practitioners maintain the highest standards, particularly in the operation of IVAs. Such relationships can become undesirably close and risk bringing the profession into disrepute. Transparency in charging fees and giving value for money is the key issue in maintaining the public confidence.

IVAs
The IPC remains concerned that IVAs can be the subject of abuse. Unfortunately, the profession does not have statistics to be able to indicate the level of premature failures where bankruptcy might well have been the correct course of action. Improvements have been made by the introduction of the brochure 'Is an IVA right for me?' and the Standard Conditions from R3. There is still concern at the level of fees charged by some IPs for the work undertaken in some IVAs.

There is also evidence that a large number of IVAs are poorly prepared and need amending
before approval. These amendments are often put forward by the Inland Revenue and the agents for the major credit card companies, giving rise to the comment that they are dictating the terms of IVAs. The IPC intends to look into this issue in more detail in 2003.

Following the Enterprise Act 2002 there is a strong possibility that the number of IVAs will fall as bankruptcy becomes a more acceptable alternative. Personal indebtedness is at a very high level and if the housing market falters coupled with a downturn in the economy, there could well be a marked increase in the number of individuals seeking debt advice. If IVAs become a less attractive option, the profession may need to consider new methods of providing debt solutions.

Debt Advice
Throughout 2002 members of the IPC met a number of representatives from organisations that provide free debt advice, i.e. NACAB, CCCS and CAP. There are a large number of people involved in these activities and the advice given to debtors varies quite considerably between organisations and also within those organisations. It does concern us that those people with debt problems cannot rely on getting appropriate advice from these sources. We note that bankruptcy is seldom recommended when it may well be the best option. The same concerns apply to fee-charging debt advisers.

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