Trionon, IVA fees are front-loaded so if it fails before all the fees are paid nothing will have come off the debts. Likewise, Payplan's PPI fees will have affected the balance reductions in an IVA and consequently the amount owing if the IVA fails. According to their claims company ( Stake Your Claim ) PPI fees due for a claim where the customer is on a DMP with Payplan and the balance is reduced instead of there being a cash payout, Payplan will add the fees owing into the DMP. This means Payplan becoming one of the creditors in the DMP they're administering. Perhaps Payplan could explain how this is consistent with the OFT Guidelines and how they can still claim to be 'impartial' in their advice to the customer.
All IVA companies charge trionon. I was only referring to DMPs. Although while you mention it CCCS and Payplan will not correct you if you say they are free for IVAs.
I think in an IVA if you have paid fees these will be gone now. To be fair this will be the case with any provider.
IVA fees are certainly not front loaded. We generally get paid based on a percentage of realisations, and so only get paid as we collect monies from clients.
We have long debated the issues referred to in this post - the difficulty being that in the charity or fair-share sectors, not all creditors pay them at the same rates - and I gather that some creditors do not pay at all. It could therefore be difficult for them to provide credible information about their general charges which are not perceived to be borne by consumers.
The current DMG is only concerned with avoiding detriment to consumers and not creditors - what makes my blood boil is that this perception spills over into the IVA marketplace where journalists and the media still refer to them as free. They charge exactly at the same rates my firm and others in the commercial sector do - and this should be made more transparent in the general marketplace, to allow clients to make a more balanced choice about the selection of an advisor.
There are however some interesting points made in this thread which I wonder will be addressed by the firms referred to.
Melanie, you say on your website that 'a significant amount of your payments into an IVA are taken first to meet your IP's fees'. Is that not front loading ?
Tiger.
These days the bulk of nominee's fees are made up of the first five IVA payments and the supervisor fee is then 15% of the rest. This means the money has to be collected for the IP to be paid and some clients never make a single payment or the IVA is rejected leaving the IP out of pocket.
In the past many IP wanted their nominee fee paid in advance of the meeting of creditors to protect themselves from the above but in these days of no win no fee this is no longer standard practice. 'Front loading' is possibly the wrong description for the current situation whereby the IP gets paid first and given that the nominee fee is actually for work done up to the date of the meeting, it seems fair and does rely on the client making their payments.
Michael, I think front-loading is a fair description in that the fees are not evenly distributed through the life of the IVA. Depending on the timing of an IVA failure, it can obviously make a big difference to the remaining level of outstanding debt if nothing has been paid off it from the customer's payments for the first 5 months plus.In a DMP it's commonly the first 2 payments taken and even this may go in the Protocol being discussed. Ironic, really, that the 'free' sector takes such exception , publicly at least, to DMP set up fees whilst they're busy taking more than twice as much in IVAs.
I think IVA fees are very fair now considering the work involved and high level of regulation within the industry that IPs have to meet.
I am not aware of any industry where a professional will not ask for upfront fees ??, given the fact that IPs may complete an IVA proposal and not receive a penny I would think that it is only fair that they receive part of their fee within the first year
Harpic, sounds like you don't care what the fees were, how they were taken and consequently what balances you would be left to pay in the event of your IVA failing.You're a dream customer !
Tiger.
No IP firm wants the IVA to fail and we bend over backwards to try and resolve any difficulties that our clients may have. If an IVA runs its course we get paid, creditors receive their money and the client is debt free. There are no winners in failed IVAs.
If an IVA fails, a DMP should not be the answer anyway or that should have been the original option. The client should petition for bankruptcy and then it is irrelevant how much has come off the client's debt.
I know how much our fees are and I am quite happy to pay them and my creditors were also happy with them.
If our IVA's fail then it will probably be because of something we have done or if the wifes employment ceases. If that happens then we'll probably drop back onto a DMP.
