The Insolvency Practitioners Association (IPA) has will “continually monitor” the use of Individual Voluntary Arrangements (IVAs) by the high-volume providers through a regulatory framework, it has been announced.
An IVA is an agreement that is made with creditors to pay off your debts over a set period of time and is one option you can use to pay off your debts. It is a formal, legal debt solution. This means it is approved by the court and your creditors have to stick to it. An IVA is a form of insolvency but it is different from bankruptcy.
An IVA must be set up by a qualified person, called an insolvency practitioner. This will be a lawyer or accountant. The insolvency practitioner will charge a fee for the IVA. Average fees are around £5,000.
The insolvency practitioner deals with your creditors throughout the life of the IVA.
‘High-volume’ firms are those that are responsible for two percent of the total number of IVAs annually. Under the terms of an IVA, it must be supervised by an insolvency practitioner (IP) and the majority of IPs who work on IVAs are regulated by the IPA.
Announcing the new regulatory regime, the IPA said that the traditional method of regulation no longer facilitates meaningful supervision of the high-volume providers who are reply upon technology to deliver the volumes of cases that are commenced each year. So, using continuous monitoring, the IPA will introduce a new way to regulate the industry.
The new system will allow inspectors to target areas that need to rapidly improve. Inspections will become more frequent and high volume IVA providers can expect up to four visits per year, as opposed to the current one.
The outcome of introducing the new framework, which is a much more intensive regime, is to improve trust and confidence in sector and to enable IPs to improve their working practices. Customers will be able to have a greater degree of trust in the help they are getting at what can be an incredibly difficult time for them. It is hoped that the changes will also provide confidence to creditors that the IVA process is transparent and that the regulatory framework is meaningful and robust.