IVAs: Better Regulation

In last year’s Annual Report we recommended that the RPBs should stop the misselling of IVAs to debtors on low incomes, in particular those reliant on social security benefits, and require IPs to give documented advice to debtors on the most appropriate option for their circumstances.

Last February we heard further evidence supporting this concern from PricewaterhouseCoopers LLP. We discussed our concerns with the JIC, with the IS with individual IPs and with Citizens Advice for both England & Wales and for Scotland. The Chairman was also interviewed on this matter on the BBC Radio 4 programme Inside Money on 29 July.

We are glad to report that in response to our concerns the JIC has issued a revised SIP3, which requires IPs to inform debtors of all available options and to ensure that they are given advice as to which option is most appropriate for their circumstances. IPs must also satisfy themselves that debtors have sufficient income to sustain the IVA proposed for them.

The major creditors have also instructed their representatives on creditors’ committees to reject IVAs proposed for people on benefits. We will continue to remain alert for any evidence of misselling through our contacts with the CAB and other independent debt advisers, including Gill Hankey of the Bankruptcy Advisory Service who left the IPC at the end of last year.

The marketing of IVAs in the media was criticised during the year both by some of the creditors and by consumers’ representatives such as the CABs. The IPC shared these concerns and along with some of the regulators has drawn the OFT's attention to instances of excessive claims being made in television and Internet advertisements. The OFT has recently ordered a number of firms with Consumer Credit Licences to amend their publicity where it was inaccurate, unclear or misleading.

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