In view of the recent announcement by TIX and the response this has generated across the industry, The Insolvency Service would like to re-iterate our commitment to the principles expressed through the recent IVA forum. The attached sets out that commitment and our response to the recent developments.




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The Insolvency Service is concerned to note the line being taken by certain creditors and their agents in respect of fees charged by IPs in IVAs. It appears that some creditors are effectively refusing to vote in favour of IVAs where the fee is above a certain level. Whilst recognising that the decision as to whether to accept an IVA or not lies entirely with the creditors, we are very concerned that this revised approach runs the risk of denying some debtors access to a debt management solution which has been identified as the most appropriate solution for them, and for their creditors. The longer term effect could be to push more people into bankruptcy, where creditors would get an even lower return.
The Insolvency Service has been working with the British Bankers Association and with representatives from debtors, creditors, IPs and regulators, to agree a standard protocol for dealing with consumer IVAs. We recognise the efforts put into this process by many people from across the industry and we believe that considerable progress has been made towards this goal, which will ultimately drive down costs and increase transparency. The last IVA forum, held in May 2007, involved over 170 interested parties and demonstrated widespread agreement and consensus on many issues. We hope that the recent developments will not halt that progress.

We believe that the IVA is an effective debt management tool. Further, we believe that the creation of a protocol for dealing with so called “consumer IVAs” is an effective means of reducing costs, increasing transparency and ensuring fair treatment of debtors and maximum returns to creditors. We remain committed to this goal and to the process of seeking a satisfactory outcome for debtors, creditors and IPs through dialogue and debate. To that end, we will be meeting with the key parties early next week.

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