Ray of light?!

Curlybing

http://www.bbc.co.uk/news/business-26692111

Found this on BBC news this morning, could this be a ray of shining light for those of us in IVA's with debt management companies?!

Anondebtadvisor

This more geared to towards debt management companies and DMPs.

It also is relevant to Insolvency practitioners as they are also currently regulated by the ministry of justice and will be going over to the FCA from 1st April

longtermplanner

Do you think you are in an unsuitable IVA?

Curlybing

I feel that I was forcibly talked into my IVA when I was at a very low point and felt I had nowhere else to turn. My company were VERY pushy. I was later informed by a charitable advocate that bankruptcy would have been a better option for me. I feel my company just saw £ signs when they saw me! :mad:

UpToMyNeckInIt

Curlybing wrote: »

http://www.bbc.co.uk/news/business-26692111

Found this on BBC news this morning, could this be a ray of shining light for those of us in IVA's with debt management companies?!

It is aimed I think at DMP's. Very interesting article nevertheless highlighting the rip-off fees charged for DMP's.

The IVA-naysayer's go on about unreasonable IVA fees, but these pale into insignificance if compared to a 20-Year DMP for example (which I was advised to do by a well-known debt charity).

longtermplanner

Curlybing wrote: »

I feel that I was forcibly talked into my IVA when I was at a very low point and felt I had nowhere else to turn. My company were VERY pushy. I was later informed by a charitable advocate that bankruptcy would have been a better option for me. I feel my company just saw £ signs when they saw me! :mad:

That is a sad and not uncommon situation. People with debts are very vulnerable to being missold either an IVA or a DMP because it looks better than the mess they are in. They often don't realise the importance of taking your time and looking around to see if their are better options. And the commercial firms making money from IVAs and DMPs can afford lots of advertising and even cold calling. Bankruptcy sounds scary and Debt Management companies often play up these fears, rather than giving advice that is in the interest of the debtor.

It will be very interesting to see how the FCA regulates this area in practice!

Anondebtadvisor

Hopefully cold calling and misleading advertising will be a thing of the past under the FCA regulation

phil2580

Anondebtadvisor wrote: »

This more geared to towards debt management companies and DMPs.

It also is relevant to Insolvency practitioners as they are also currently regulated by the ministry of justice and will be going over to the FCA from 1st April

I'm afraid your information regarding Insolvency Practitioners is incorrect.

Insolvency Practitioners are regulated by either the Institute of Chartered Accountants in England and Wales (ICAEW), or the Insolvency Practitioners Association (IPA).

Neither the Ministry of Justice nor the FCA have any involvement in the regulation of Insolvency Practitioners. The only involvement the FCA have is in the issuing of Consumer Credit Licenses.

phil2580

longtermplanner wrote: »

That is a sad and not uncommon situation. People with debts are very vulnerable to being missold either an IVA or a DMP because it looks better than the mess they are in. They often don't realise the importance of taking your time and looking around to see if their are better options. And the commercial firms making money from IVAs and DMPs can afford lots of advertising and even cold calling. Bankruptcy sounds scary and Debt Management companies often play up these fears, rather than giving advice that is in the interest of the debtor.

It will be very interesting to see how the FCA regulates this area in practice!

I assume you are aware that all IVA providers are commercial entities?

All of the CAB referrals go to Grant Thornton (very much a commercial entity); Stepchange received funding from the banks (thus it's directly in their interest to act in the banks' favour), and only directly deal with easy cases - the rest get passed out to, guess who, Grant Thornton.

You may also be surprised to hear that there is very little money to be made in IVAs. Cases with £100pcm contributions typically only pay £15 per month in fees. That's barely enough to cover the cost of postage and stationery, let alone staff costs.

UpToMyNeckInIt

phil2580 wrote: »

I assume you are aware that all IVA providers are commercial entities?

All of the CAB referrals go to Grant Thornton (very much a commercial entity); Stepchange received funding from the banks (thus it's directly in their interest to act in the banks' favour), and only directly deal with easy cases - the rest get passed out to, guess who, Grant Thornton.

You may also be surprised to hear that there is very little money to be made in IVAs. Cases with £100pcm contributions typically only pay £15 per month in fees. That's barely enough to cover the cost of postage and stationery, let alone staff costs.

Well said.

...and I thought I was cynical!!!

longtermplanner

phil2580 wrote: »

You may also be surprised to hear that there is very little money to be made in IVAs. Cases with £100pcm contributions typically only pay £15 per month in fees. That's barely enough to cover the cost of postage and stationery, let alone staff costs.

That doesn't surprise me at all. But it's the IVA industry's own fault for try to push an unsuitable solution at these people. If you can't make money by giving a decent, personal service to people who are paying £100 a month, then you should only be taking people on as clients who can pay £200 a month.

An IVA is a serious and complicated debt solution. It is perfect for a few people. But the disreputable end of the industry is talking people with no property, who would have no employment problem with bankruptcy, and sometimes who are reliant on disability benefits into IVAs, when DROs or bankruptcy are a better solution.