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20 Oct 2011
INSOLVENCY trade body R3 has welcomed the government's announced it will examine certain personal insolvency processes.
The department for Business Innovation and Skills launched the enquiry into debt management following responses to its consultation "Consumer Credit and Personal Insolvency Review.
Further reading
The inquiry will focus on debt management plans which are not regulated and do not have to be arranged by a licensed insolvency practitioner.
President of R3 Frances Coulson (pictured) said: "R3 welcomes the announcement that the BIS Select Committee will be launching an enquiry into Debt Management. Debt management plans have been under-regulated for far too long.
"DMP providers should be subject to the same high standards of regulation, monitoring and professionalism as licensed professionals. We've not yet seen enough action from the Government in this important area, and this is a good start."
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R3 and debt management
IPs are under qualified when it comes to debt management and should certainly not be looking for any enhanced role in that area. Already in IVAs they act as little more than rubber stamps - CCCS only employs only one insolvency practitioner. IVA misselling , despite IP 'involvement', is likely to be the next big scandal. Multiple thousands of IVAs are just waiting to fail as soon as interest rates start rising. Most vulnerable are those IVAs , signed off by IPs, dealing with low levels of debt and low monthly payments ( £140+). These payments will be wiped out by increases in priority debt payments over the next 5 years and the debtors will be returned to square one - plus the fees already paid out of course.
Posted by: Alan Stuart, 20 Oct 2011 | 11:43