implementation costs

[urbanfox]

I have just sent in all of my documents for my second annual review but a question has arisen after looking at the paperwork from my first annual review. Looking at the receipts and payments from last year it states that i paid 508 implementation costs plus 87 irrecoverable VAT. It also states that the payments were: nominees fees of 3405, disbursements of 1.06, supervisors fees of 629.51 and irrecoverable VAT of 49.44 leaving a total of 3356 balance at the bank.
Can anyone explain what the implementation costs are? From reading past posts, i was under the impression that the nominees fees covered all the setting up of the IVA so i am a little unsure about what additional implementation costs are being charged.
I did have a number of other questions / complaints / concerns which i put in a detailed letter for the attention of my IP and included it with my review paperwork requesting that it was forwarded on to my IP as i do not know how to contact him directly - this was 4 weeks ago and as yet i have had no response to any of my questions / complaints. I didn't really expect to as this particular company are notoriously bad at responding despite making it a requirement from me that i respond to any requests from my IP within 7 days.
My other question is, does anyone know how i can see how much has actually been distributed to my creditors - i have checked on one of the credit score sites and it shows that in the last year no payments have been made despite me paying in to date over 55,000. Are the payments normally made at the end of the second year or as funds are available and will this information be given to me after my review?
Thank you so much for all your help, i truly value the information and advice given on this site.

[Foggy]

Hi -- did you go direct to your company or where you referred via an introducer ? It could be the introducer's fee.

Just as a "by the way" and I might be out of touch here --- but those Nominees fees strike me as a bit high!

[urbanfox]

Hi Foggy,

Thanks for the reply - sadly i was one of those who didn't know any better and it seems that when i took out the IVA, i was referred through an introducer - i only found this out a couple of months ago when i questioned something else and i am still waiting for an answer on the relationship between the two companies and why i was never informed that they were in fact only acting as an agent. I did however pay 910 up front the first company, they told me (in writing) that this was instead of my first payment to creditors however there is no mention of this anywhere in my IVA so the "implementation costs" mentioned on my review paperwork are something completely separate.
I also think that the fees are high, they will total 17,000 on top of my debt as i am paying 100p in the pound plus fees but the fees are i am told quite legit (5 x monthly contribution of 681). I am questioning these extras such as implementation fees as i am already paying a lot on top of the full contribution to my creditors (and will pay in off in half the stipulated time) and it all adds up.

[Michael Peoples]

You are entitled to a full breakdown of fees and costs especially if you are paying 100p in the £. It is also not acceptable for complaints and queries to be ignored so check the IPs website for details of how to escalate the issue.

[urbanfox]

Thank you Michael, I checked their website for the complaints procedure and it states that all complaints will be acknowledged within 5 working days and a final response will be send within 4 weeks of receipt of the complaint. Although it details the complaints procedure it does not provide any details about where to send complaints. I have sent an email to the enquiries department asking where i send complaints and included details that i sent a complaint letter 4 weeks ago but have so far heard nothing. If i do get a response then i will also enquire about the implementation costs and what they are for - hopefully i will get an adequate response. Thank you for your time to answer my questions.

[MelanieGiles]

The whole issue of the payment of introducer fees is very under the spotlight so far as our regulatory bodies are concerned, and is very much welcomed from my personal perspective.

I think you definitely need to query what an "implementation fee" is. The nominee's fee is the fee rightly payable for setting up the IVA, and if this fee has been drawn without authority from creditors then that may well be an issue of some concern.

Which firm are you with? In addition their complaints policy is deficient if it does not provide full and clear details of how a complaint may be lodged.

[urbanfox]

Thanks Melanie. I did send an email to the enquiries team asking where i would send a complaint and included the reason was that i had already sent a letter 4 weeks ago but had no response. They came back to me with a message to send it the email that i used and put complaint in the subject line then she said that she had reviewed my previous communications and it appeared to her that my questions had all been answered by my case worker but i was free to contact her with anything else. Seemed to be missing the point a little and no apology for ignoring my letter from 4 weeks ago but i will send it again.
I have a feeling that the implementation costs are things like storage fees and case management fees as i think this was mentioned sometime to me but i would like to have clarification as it has not been explained anywhere on any paperwork. The only paper i got from my review last year was one page showing what had been paid in and what had been paid out but no details.
I am with Kingsgate - i have made several complaints already about the lack of communication and response and have a new case worker who i will admit does respond in good time for the majority but i can't get past her, anything i send for the attention of my IP is always responded to by her and doesn't always answer my questions, leaving me a little frustrated.
Thank you again for your advice, always appreciated.

[MelanieGiles]

In which case I would definitely ask for a breakdown of these so that you understand exactly what is being charged. IPs are allowed to charge various items of out-of-pocket expenditure to an IVA case, but these must be properly disclosed within the IVA proposal, discussed with you in advance, and some of which do need the express agreement of creditors to charge them.

It is a shame that your perception of the firm acting for you is not so good, especially as you must have had good reasons for selecting them in the first place. If you feel the need to speak directly to your IP to express your concerns, then this is your right and I am sure he/she would want to help where they can.

The firm concerned are members of the trade association DEMSA, which requires very high standard to be maintained of its members, so I am sure you will eventually get this matter resolved to your complete satisfaction in time.

[urbanfox]

Thank you Melanie for your response. I think that rather than letting this bother me any further, i will wait until i have my review completed - hopefully as this is my second review and i am on track to complete the 100p in the pound plus fees well within the 5 years that i will get more information after the review but if not then i will definately bring it up again. I actually didn't select this firm - i was caught with one of these "introducers" so the firm that i thought were representing me were actually only putting together my paperwork to hand over to someone else and i didn't realise that they were not connected until i questioned the misleading "no costs as creditors pay all the fees" statement on my introductory letter and was told that they couldn't comment on what a different firm told me in the begining. Shame but i will simply hold on the thought that my IVA might be completed in 3.5 years with creditors receiving 100% rather than 5 years and them getting less - which of course is a good thing.

[MelanieGiles]

Time and time again I hear tales from people who had thought that their IVA was going to be via the firm they had asked to help them, yet at the last minute they are advised they are to be passed to another firm who will act as the IPs - with payments being made from that firm to the introducer firm of often up to the full value of the nominee's fees and beyond. This is despite the fact that IP firms are only allowed to pay for actual work done on a file - and a very interesting paper has just been issued by the Joint Insolvency Committee on this very subject.

If IP firms feel that it is commercially viable for them to enter into such arrangements, then I guess that is a matter for their own commercial strategy, their consciences and ultimately their regulatory bodies, but for the clients at the end of that food chain it is vital that you enquire at an early stage who the IP is going to be - and is it going to be an IP employed by the current firm or outsourced.

Hasten to add that there is nothing wrong with these type of introductions - this process has been going on for at least 15 years and I have certainly acquired a number of my own cases via such route - paying a reasonable acquisition fee for doing so - but at the end of the day IPs can only be held responsible for the advice provided by their firms and not the introducer.

[chrissy12345]

Melanie - As IPs are responsible for the advertising and marketing of an introducer firm under the code of ethics where it has lead to an insolvency appointment, then would this not include the advice given and the responsibility of the IP to check on this advice?

[MelanieGiles]

IPs are not responsible for the advertising and marketing of introducer firms - however IPs do have to satisfy themselves that introducers are correctly licensed to engage in the activity of providing debt advice, and are doing so ethically and providing correct advice. If not, then we should not accept the appointments and should highlight any concerns to the FCA.

[chrissy12345]

What about paragraph 65 of the code of ethics? This does refer to advertising and marketing. So if an introducer firm was advertising in a misleading way or giving misleading advice, and an IP took the case on would they not be in breach of the code?

[MelanieGiles]

They are not responsible for the activities of another company - but they are responsible for taking the right decisions as to when to accept a case, and from whom.

If the introducer firm was advertising or marketing in an inappropriate way, then this may result in a suspension or withdrawal of their consumer credit licence. If an IP continues to accept introductions from a non-compliant firm, then this may also affect that firm's ability to operate under its own or its group licence as well.

These matters are pretty important, and IPs must carry out full and correct due diligence at the outset of working with new introducers, and continually throughout the relationship as well. If at any time there is reason to doubt the ethics of the introducer, then they should cease the relationship and consider whether to report their concerns to the FCA.

[chrissy12345]

Interesting stuff thanks Melanie