Insolvency Practitioners In Government Sights
Office of Fair Trading Press Release
17 January 2007
The OFT has warned 17 financial management businesses promoting
Individual Voluntary Arrangements (IVAs) that it considers their
adverts and websites potentially mislead consumers. This follows a
compliance sweep undertaken by the OFT in November 2006 of 124
adverts in national newspapers and 57 websites promoting and
marketing IVAs. IVAs are increasingly being used by consumers in
debt as an alternative to bankruptcy. With the agreement of the
majority of the creditors, consumers are allowed to pay back a
proportion of the debt they owe over a set period, typically five
years. The most important problem is that IVA's can be much more
expensive than bankruptcies which is often not made clear and
organisations are banned, inter alia, from failing to state that
set-up and administrative fees will be required and will be taken
out of payments before the creditors receive any payment.