IVA’s hit record levels in the UK

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IVA's hit record levels

New figures from the Insolvency Service show that there were nearly 88,000 IVA’s were registered in England and Wales in 2022, the highest annual number since records began in 1990.

In England and Wales, one in 18 Individual Voluntary Arrangements (IVAs) (5.5%) registered with the Insolvency Service in 2021 terminated within one year of being approved. This was lower than the one-year termination rates in 2015-2019, but higher than the record low one-year termination rate in 2020, which coincided with the revised IVA protocol in response to the COVID-19 pandemic. Two- and three-year IVA termination rates of 10.3% and 17.5% (for IVAs registered in 2020 and 2019 respectively) were lower compared to IVAs registered in the preceding years.

Termination rates over the lifetime of an IVA increased from approximately one in four (25%) for IVAs registered between 2012 and 2014 to one in three (33%) for IVAs registered in 2016 and 2017. Many IVAs registered in 2018 or later remained ongoing as at 31 December 2022, so a definitive trend cannot yet be established, but there are preliminary indications of a decline in lifetime termination rates.

Termination rates over the lifetime of an IVA increased from approximately one in four (25%) for IVAs registered between 2012 and 2014 to one in three (33%) for IVAs registered in 2016 and 2017.

IVA’s can be a good option for some

Richard Lane, Director of External Affairs and Operating Subsidiaries at StepChange, said “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.”

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