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Insolvency Practitioners 'not to blame' for mis-sold IVAs

Insolvency trade body R3 has hit out at claims by Northern Rock that its surge in bad debts has been caused by missold IVAs.

R3 said it was 'staggering' that the bank had blamed inappropriate IVA selling by practitioners as increasing its provision on unsecured loans to £55.9m from £33.5m over the past six months compared to a year earlier.

'I find it staggering that Northern Rock are seeking to lay the blame for their poor lending decisions at the door of IVA providers. Insolvency practitioners don’t lend the money and they don’t spend it. They offer a solution to help people sort out their debt problems,' said R3 vice president Nick O'Reilly.

'I will be writing to Northern Rock asking for evidence of their claims that 9 out of 10 people have been recommended IVAs that are not in their interests.'

Northern Rock chief executive Adam Applegarth said that 'nine out of ten' IVA proposals were unrequired and the individual only needed to reorganise their finances, reported the Daily Telegraph.

'We have a problem with practitioners of IVAs and refuse them if we don't think they are in the customers' interest.'

Capital One was the last bank to call into question the IVA process, announcing that it was looking to cap its fees paid to practitioners.

Source: financialdirector.co.uk


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Wow thats a strong claim from NR,no wonder they reject so many.
How many people come on this forum with a "together mortgage" where they have a huge unsecured loan that is well in excess of their house value ?
regards

Andy Davie
IVA.co.uk Spokesperson

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I wonder if someone is trying to lay the blame of their decreasing profits at someone elses door?! and trying to get a scapegoat?!!
Is this gentleman trying to state that IVA's going before them should not have been presented!?
Very Interesting indeed!

I have just seen this on the net
Adam Applegarth, the chief executive, said: “Unemployment is the main driver for arrears and that is drifting higher, so we are seeing a drift up in arrears. But I wouldn’t use a verb more racy than drift.”

He said that the rise in bad debt charges was prudent, given Northern Rock’s expectation of a “moderate deterioration” in credit risk across the retail banking sector amid slowing economic conditions, rising interest rates and higher energy costs. The company went on to say that it planned to work in partnership with Lehman Brothers to enter the self-certification and so-called “near and sub-prime” mortgage market, which is targeted at borrowers with patchier credit records.

!!!!! Enough said!!!!!!


Zoe
x
Keep your chin up - everything happens for a reason!
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amazing its everybodys fault except theirs, unemployment, ip's putting forward proposals that shouldnt be, whats next , the floods have ruined the veggies and sainsburys put the price of cabbages up and people arent paying us because of the cabbages. Nothing to do with bad lending decisions[:0]

Ang

Please visit my blog at http://aguise.blogs.iva.co.uk/

"take responsibility" comes to mind
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

I find it amazing how many people on here have NR as one of their main creditors. Maybe if they rejected a few more loan requests instead of IVAs there might not be so many IVAs. I would have thought that lending the high amounts they often do to people as consolidation loans would warrant further investigation of their ability to repay.

Regards

Dave

Its a numbers game Dave..... NR claim less than 0.6% bad debt so for every 1000 loans 6 will go wrong.

However this relies on a very simple formula - you need more coming in the front than is going out the back.

To ensure they maintain the bad debt as it is they need to keep lending agressively. The more you are exposed to bad debt the more you need to lend to keep the balance.

The test of Northern Rock will be any kind of downturn in the housing market....

Hi
That is a good point,a high volume of new business is a way to keep bad debts looking acceptable,if measured as a percentage of overall business.It looks as if by going into the sub prime market they are determined to keep the new business at a high level,even if it,s at a higher risk.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

Its not reality that matters, it is the perception of reality that really counts. Andy is right about NR. My wife worked for HSBC for years and they were actually given warnings if they didn't sell x amount of loans per week. So, as a result she worked on the asssumtion that having yet another loan would get rid of our problems, when in reality, it simply added to it. This isn't helped by Carol Vorderman trying to paint a rosey picture of a debt ridden family having all they're problems sorted with yet another loan and all would be peachey!!

I don't think its the IP's fault, I personally feel its the banks for overlending when the government is urging employers not to give wage rises that exceed the rate of inflation (the actual rate of inflation is yet another debatable point) and marketing companies that bombard daytime TV with adverts for IVA's as this great problem solver with exceptionally small fine print warning over the legalities of IVA's.

I feel that most of the country will be heading down our road at some point in the near future becuase at the moment they are sleeping comforatably in their beds thinking that they aren't in TOO deep 'cos otherwise the bank wouldn't have just given them another couple of grand or extended their overdraft again. The reality of it is, they are getting them just where they want them and when it comes down to it, lets see how helpful the staff are when you tell them that if you pay them you can't feed the kids.