IVA Market Experiences Changes
Banks claim that people with debt problems are being sold IVAs as a way of washing their hands of debt, rather than as part of debt management program. This violates the purpose the IVA was created for.
In its interim statement today, Debts.co.uk revealed that it expects 1,064 IVAs to be completed within the next 8-10 weeks. Gerald Farr, analyst at Seymour Pierce, says that the group averages between 280 and 300 IVAs per month. This is double from July 2006. Farr attributes the performance on the IVA market to the success of a new advertising campaign.
However, the Office of Fair Trading has investigated several IVA firms with false advertising, and making unrealistic promises.
Debtcare, the debt management business, experienced significant strong growth. Debtcare has more than 2,000 clients, with the base increasing by 100 each .
Farr reveals that the industry is ready to introduce a voluntary code of practice. Debts.co.uk has been vital to this process, and confident that the company will be able to comply with the new regime.
The new Simplified IVA (SIVA) should streamline the IVA process for a significant and improve transparency. This should have a dramatic impact on the number of false sales. The industry has already seen a major downward trend that is expected to continue.
Debts.co.uk shares fell 45% in the last six months, reflecting concerns over the long term industry forecast.
IVAs have lost their initial glow as consumers are learning that they are not the ‘freedom from debt’ tool that the industry promised they were. Many consumers are returning to debt consolidation loans, and other debt management tools.
Source: 1stopfinanceshopUK
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