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| Annual Report 2007 Recommendations Statistics on Individual Voluntary Arrangements and Debt Management Plans (DMPs) Debtors, creditors and IPs need better information about the pros and cons and performance of the main “debt solutions” available for distressed personal debtors to enable them to make informed decisions about the most appropriate solution for the debtors. The Recognised Professional Bodies (“the regulators”), which regulate IPs also need better statistics to help them monitor the performance of individual IPs. There is a particular need for regular published statistics on the completion and failure rates of Individual Voluntary Arrangements (the main statutory form of personal debt relief short of bankruptcy) and of the informal Debt Management Plans (DMPs) often favoured by the banks. In each of the last two years around 40,000 new IVAs were agreed. Best estimates suggest that new DMPs in the UK are at least 125,000 a year. We understand that the Insolvency Service is now providing the regulators with quarterly statistics on the completion/failure rates of IVAs in line with a recommendation we made two years ago. However, no meaningful statistics on the performance of IVAs are yet available to the general public or to creditors either in aggregate form or for individual IPs or their firms. There are no aggregate statistics available for DMPs. There was a general agreement between creditors, the insolvency profession and their regulators in last year’s IVA Forums that more and better statistics about IVAs were needed. A Working Party was set up to make recommendations on what improvements should be made but, at the time of writing, has not yet reported. We welcome this initiative. We draw attention, however, to two points, which are essential to improving both the advice given to debtors and the decisions made by them. First, data about the performance of IVAs proposed and supervised by each IP and by individual debt advice firms should be published in a form readily accessible not just to creditors but to debtors and the general public. Second, similar information also needs to be collected and published relating to the performance of the informal Debt Management Plans. The IVA Protocol agreed between the British Bankers Association and the insolvency profession rightly requires that all debtors must be fully advised by IPs and debt advice firms about the pros and cons of all the options available to them. At present, however, with one or two exceptions, neither debt advice firms nor the lenders publish any information about the duration or typical contributions required under DMPs, and there are no industry-wide statistics on the completion/failure rates of DMPs. Without adequate information about all forms of debt solution it is difficult for debt counsellors to advise on the most appropriate solution or for debtors to judge what is in their own best interests. We therefore recommend the following measures, the first three of which we also recommended last year: • The Insolvency Service (IS) should start publishing annual statistics showing aggregate completion/ failure rates of IVAs set up in each of the previous five years; • The IS and the regulators should agree to publish annually IVA completion/failure rates for each individual IP and, if possible, their firms, for all the IVAs set up in each of the previous five years; • In the longer-term the IS should take the necessary steps to provide regular electronic information to the regulators on the financial performance of IVAs and consider whether these can also be supplied to creditors; • The IS and the regulators should work together with IPs, creditors and their agents to collect and to publish annual statistics on the numbers of proposed IVAs rejected by the creditors both in aggregate and for each IP acting as nominee. The numbers of IVAs rejected annually by each of the main creditors should also be published; and • The IS and the regulators should also work together with creditors, their agents and the Debt Resolution Forum (DRF) to reach agreement on the annual collection and publication of statistics both in aggregate and by firm on the numbers of DMPs proposed and agreed each year and the outcomes of those plans. |
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