BusinessBusiness RecoveryInsolvency industry and banks thrash out IVA fee structure

Insolvency industry and banks thrash out IVA fee structure

Banks and IVA providers avoid discussing level of fees at crunch meeting, but fee structures are set to change

cash till

Negotiations are set to continue between the major lenders and IVA providers
about altering fee structures following yesterday’s crunch meeting between the
two parties, however, controversial plans to cut fees were not discussed.

Capital
One’s
announcement that it would slash fees paid to insolvency
practitioners administering IVAs caused a furore last week, and reports
suggested the issue would be top of the agenda at a meeting between the major
lenders, the
British
Bankers’ Association
and IVA providers.

Instead, the parties tried to thrash out a way to alter fee structures paid
to practitioners so lenders would receive more funds early on during an IVA.

‘We were looking at identifying what came under the costs incurred by
[practitioners] before an IVA was agreed by creditors,’ said Eric Leenders, head
of the retail team at the BBA.

Leenders said the parties were ‘trying to get the right balance’ between how
fees were divvied out between the practitioner and the creditor, so creditors
received repayments earlier on in an IVA.

Michael Shirley, operations matter at IVA provider
DebtMatters
, said the meeting was ‘productive’.

The parties looked at what constituted the costs practitioners incurred prior
to an IVA being agreed, which must be paid out before creditors receive any
payments, then look to encourage the practitioner to recoup more funds by
offering a percentage of funds recovered.

Creditors were also likely to be paid more frequently than at the current
rate, which is usually once a year. Monthly or quarterly payments are being
considered.

Further reading:

IVA providers face crunch
meeting today

Capital’s fee cap doesn’t fit all

Firms gear up for a slice of the insolvency
action

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