New figures from the Insolvency Service show record numbers of IVAs registered in England and Wales in 2022, with almost 88,000 individuals seeking debt relief through the insolvency procedure.
However, the data also revealed an increase in the termination rates of IVAs from 25% for those registered between 2012 and 2014 to 33% for those registered in 2016 and 2017.
Richard Lane, director of external affairs and operating subsidiaries at StepChange, expressed concern over the rise in IVAs and called for reform in the sector to protect vulnerable consumers from unscrupulous firms posing as debt advice charities and routing them towards high-referral-fee-paying IVA providers.
He added: “While IVA’s can be a good option for some, their continued rise in popularity is concerning given the urgent need for reform within the sector.
“Too often consumers seeking debt advice at a vulnerable time are being preyed upon by unscrupulous firms posing as debt advice charities and routed towards an IVA from a provider paying high referral fees.
“We welcome the FCA’s move to ban debt packagers from charging these fees and will be submitting our recommendations to its latest consultation this week.
“There is much work to do to enable people seeking help with their debts to distinguish between high quality debt advice and IVA lead generators that may cause them harm.
“We look forward to further clarification from the FCA on the regulated debt advice boundary in relation to referrals to an Insolvency Practitioner or their firm.
“If we’re to see meaningful reform in the IVA market, consumers seeking advice about debt solutions should have the full protection of the standards set by the FCA.”
