Insolvency Service Reply - re secured loans

[longslog101]

Annoyed at the increasing number of firms who seem to be applying pressure on people in IVA to do equity release through secure loan or face a breach (when they are not required to) I wrote to the insolvency service to ask if they were aware of the practice. I pointed them to various discussions on here and said allegedly offending firms, I also offered some practical solutions/suggestions.

For Example

Auditing firms to see if they are forcing it upon clients when they shouldn't be to their financial detriment.

Communicating with those on the register to let them know what can and can not be asked of them.

Suggesting they can be the ones to prevent the next PPI claims mis-selling scandal (Forced secure lending miss-selling) through early intervention & change.

Here is their response received today.

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Dear Mr Smith,

Thank you for your letter of 20 August about the equity release provisions contained within the IVA Protocol and how they are used in practice.

I would like to start by congratulating you on completing your IVA. I am very aware that a person who is struggling financially has some difficult decisions to make; it is always a pleasure to hear from someone who has successfully resolved their problems.

Thank you for raising your concerns about the IVA market and how it is working, especially in relation to the way in which people are expected to release their home's equity into their IVA. Insolvency Practitioners are a trained and regulated group of professionals and so should be operating in a fair and balanced way. In particular, if they are advising a client that an IVA is appropriate for them, that client should know the full implications and consequences of entering that IVA. Likewise, that client should not feel pressured into accepting a change to their IVA (or the terms and conditions that apply to it) if that change does not work for them.

My colleagues who deal with the regulation of insolvency practitioners are aware of concerns around debt advice generally and are working with regulators to assess the
position. I have brought this letter to their attention, as your comments will be very useful for this review.
I will also ask colleagues to raise this issue at the next meeting of the Standing Committee to see whether others have the same concerns. In case you were not aware the IVA Standing Committee meets three times a year to discuss the IVA market, in particular in relation to the Protocol. There are representatives from across the debt advice sector (representing consumers), creditor organisations and insolvency practitioners.

I would like to thank you again for raising your concerns with us; direct feedback like yours helps us to ensure that problems are identified and addressed at an early stage.

Yours sincerely
Lisa Smyth
Correspondence and Complaints Manager

So, if you have found yourself in this situation and they are trying to apply said pressure to you or imply you are bound by new protocols when you are not then I suggest a letter/email to her at correspondence@insolvency.gsi.gov.uk in addition to the standard Gateway Insolvency Practitioner complaint procedure.

Give then Insolvency service the meat they need to demonstrate the scale of the problem or the potential for this to grow, which could be nipped in the bud.

Cheers
Longslog.....on a mission....[8D]

[Lisa Thomas]

Why don't you apply to join the committee...?

[longslog101]

Good idea, I shall investigate who is allowed to be on there....

https://www.gov.uk/government/collectio ... -committee

Their minutes are quite interesting to read from meetings and their purpose/function.

[abbiesmum2003]

Interesting!
Well done for making that contact and also what a very professional and nicely worded email reply. After poor, judgemental and plainly rude communication from certain iva companys this must have made a pleasant change. And yeah...you should join committee!!!

[lifenoteasy]

Agree

[footiemad]

Very interesting

[recovering]

Great work Longslog! it would be fab if you could join, how helpful would that be to us minnows! I t is interesting to know they have already heard about this so I think we all need to shout loudly! Can this post be flagged up? Just feel all of the forum should know about it

[kallis3]

You can contact admin/Andy Davie and ask him to make this a sticky so that if anyone goes to active topics it will appear at the top.

[kallis3]

I've made it a sticky and told Andy what I have done.

[recovering]

Brill thanks Kallis

[thisusernameistaken]

Nicely done, longslog.

What's become very evident to me over the last couple of years is just how bad some IVA companies are. They are supposed to be 'trained and regulated'? I would struggle to correlate that with some of the utter misinformation and outright lies that are told to some people in IVAs.

It's also become clear that a significant proportion of people in IVAs don't fully understand what they've entered into, for example people selling homes without understanding that equity will be snapped up by the IVA, devious practices around how the '85%' rule is applied to valuations/mortgage assessments and, as you've highlighted, the pressure tactics to take on more debt in order to get out of debt...! All of these things are onerous for the debtor and serve only the IP's pockets at the end of the day. Paradoxically it's in their interests to keep debtors in an IVA as long as possible in order to milk every penny from them.

Much of the industry is a dodgy cesspool and even when you make the right move to avoid a crap IP you find yourself dumped with one through no fault of your own and with no say in the matter whatsoever.

I said to a friend the other day that if I were in the process of looking at an IVA now I would probably decide to take the bankruptcy option based on the latest protocols and practices, despite the more significant ramifications.

Failing that if I were to do an IVA I would want it written in that I will not be sold on and if the IP were to cease trading that I be allowed to approach an IP of my choice.

The disparity between good and atrocious IPs is stark, and widening.

[Adam Davies]

Hi

Happy to have this thread in the spotlight

Well done Longslog

Regards

[Shining]

Yes well done from me too

[longslog101]

Some will have seen I have an inability to write a short post [:p] so to save loads of text here I have taken everything I have gleaned about this and incorporating the response from the insolvency service and written what I believe would be a starting point/foundation for a letter to send to any IVA firm if you are being asked to do something different than the 12 month extension, or being told they need to do the 12 month extension when perhaps they don't because your share of equity in the property is actually less than that triggering the equity release clause in your agreement.

It's not perfect but hopefully it gives an idea. I welcome any suggested changes by response to the blog which I will incorporate (rather than make this thread too long) and then perhaps we can create a collective letter that has all the required bits ?....[:D]

http://longslog101.blogs.iva.co.uk/2015 ... an-in-iva/

[Shining]

Thank you for being a valued member of the forum and investing so much time in helping our other posters. Much appreciated.