IVA & Debt Consolidation Advice

IVA companies recently agreed to spread out their fees over several years after pressure from Britain's major banks concerning their charges. IVA companies, intermediaries, and creditors agreed to a meeting in order to address some standard guidelines concerning the fee structure, advertising, and advice that the IVA companies offer to people who are seeking relief from their debts.

This agreement follows a large increase in the number of people seeking to take out IVAs, a program that allows debtors to write off a portion of their debt while repaying the remainder over several years through an agreement drawn up by an IVA provider. Creditors have been critical of some providers, saying they take too large a fee, don't advertise in a responsible way, and fail to offer the best advice to the debtors. In light of the recent agreement, it is likely that the fees IVA providers charge will be spread over the period of the arrangement instead of being paid at the start of the arrangement.

According to Eric Leenders, executive director of the British Bankers' Association, the agreement has been reached to recalibrate the structure, but they have to get more details on a final agreement. It is expected that the changes will be implemented within the next six months. There was no discussion about setting a standard fee for an IVA.

Some banks such as HSBC have gotten tough on how much they will pay IVA providers. Capitol One has stated it will no longer pay more than 4,500 pounds for any one IVA. Currently providers receive about 7,000 pounds for each IVA according to estimates.
As of the end of March, there were 48,000 IVAs, an increase of over 80 per cent from the previous year.