Following on from yesterday’s report re “financial institutions pushing IVA firms to cut fees”, the UK’s main body for IVA practitioners has responded to lenders, describing certain comments as being “badly timed” and “unreasonable”.

The trade body has defended IVA firms stating that industry representatives are working together and have been for some time, in an attempt to improve the IVA procedure for both consumers and creditors. The IVA procedure has experienced unprecedented growth due to record levels of consumer debt, and the way in which the procedure is conducted is currently under review.

Members of the body have accused one lender in particular, of attempting to make the procedure financially unviable, thus forcing IP’s to withdraw from the market completely. Such a move would mean considerably less choice for the consumer and would force many to turn to Bankruptcy. IP’s have also stated that if the IVA were no longer available to consumers, many lenders would be far worse off in respect of recouping their losses.

The IVA allows an indebted consumer to make a formal proposal to their creditors in respect of payment. Essentially, the arrangement enables the consumer to wipe off a proportion of their debt, only repaying what they can realistically afford. Many Banks and other lending institutions have criticised IVA firms, saying that the procedure is being mis-promoted and ultimately mis-sold. In response to such claims, new rules and regulations relating to promotion, fee’s and ethics are soon to be introduced.