It has been reported today that debt advisors will no longer be allowed to receive referral fees for putting debtors in touch with debt solution companies. We have come across quite a few instances where people have been ‘sold’ an Individual Voluntary Arrangement (IVA), when that was clearly not the right solution for them.
People in debt are in vulnerable position and whilst entering into an arrangement with the creditors and making monthly payments through an IVA is a suitable debt solution for some, as the article highlights, for others entering a debt relief order or even bankruptcy is the appropriate solution. It is of course not only the debt advisors who are at fault here, but also the insolvency practitioners who are involved with IVA companies, as every IVA needs to be supervised by a regulated insolvency practitioner.
We support the call from Citizens Advice for all pre-IVA advice to be regulated, but in the meantime, if you need advice about how to manage your debts or a debt solution, don’t turn to organisations whose business model focuses only on IVAs. Instead, take advice from a regulated firm of insolvency practitioners who offer a wide range of services and who will offer advise on all options available.
Debt advisors will no longer be allowed to receive a fee for referring people to debt solution companies. The Financial Conduct Authority (FCA) banned the fees after finding some companies were putting them ahead of customers' best interests.https://www.bbc.co.uk/news/business-65779455