Consensus is the way forward on IVAs, says ICAEW
The Institute of Chartered Accountants in England and Wales (ICAEW) has today urged consensus on the way forward on the Individual Voluntary Arrangement (IVA) protocol, following a statement issued by the Insolvency Service on its view of the development of the IVA protocol which the ICAEW strongly supports.
There has been a great deal of effort and cooperation by a range of parties representing debtors, lenders, insolvency practitioners, and regulatory and representative bodies through the IVA Forum. This has aimed at building trust between all parties in the IVA process so that IVAs can continue to function as a credible and efficient way for individuals to resolve their debt problems.
It is very important for debtors who are in financial difficulty to receive appropriate advice on their options. Recent research by the Insolvency Service has shown that debtors do not want to go bankrupt because of the stigma associated with it and do want to pay off their debts. An IVA can assist them and provide a better return to creditors than bankruptcy. It also provides a legally binding agreement in respect of an individual’s debts which many debtors are likely to find comforting.
Developing the protocol has not been a straightforward process and cannot be achieved instantly. We have appreciated the care that the Insolvency Service has taken to guide the project forward, and the effort by all parties to achieve a workable solution. Agreement across the range of issues is now close. However, this process is not helped if some, who are party to the Forum process, issue statements which rely partly on the protocol process but which unilaterally impose terms and conditions. Our concern is that insolvency practitioners will, in some cases, not feel able to take on the roles of nominee and supervisor, thus denying access for some individuals to a statutory procedure for the resolution and rehabilitation of indebtedness.
Specifically, on the question of fees, an IVA is a regulated process under statute. It requires certain work to be undertaken and the work involved (in particular at the nominee stage of the process) may have a cost unconnected with the size of the IVA. Therefore the imposition of a fee structure, whether or not it is based on a formula, is not appropriate. We of course accept that an IVA provider should conduct his business in an efficient manner with a consequent impact on costs.
We consulted with the Insolvency Practitioners Association when drafting this statement and it is issuing a substantially similar statement to its members.
We are deeply committed to achieving a sensible, workable IVA protocol and we urge all the parties to cooperate with the Insolvency Service to achieve this aim.
Source: myvesta.org.uk
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