BusinessBusiness RecoveryUpfront IVA fees thrashed out

Upfront IVA fees thrashed out

Major lenders and IVA providers tried to thrash out a way to alter fee structures paid to practitioners that would enable lenders to receive more funds early on during an IVA

Negotiations are set to continue between major lenders and IVA providers
about altering fee structures following a crunch meeting between the two
parties.

However, controversial plans to cut fees were not discussed at the highly
anticipated gathering last week.

Capital One’s announcement that it would slash fees paid to insolvency
practitioners administering IVAs had caused a furore, 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 that would enable lenders to 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 director at IVA provider
DebtMatters, said
the meeting was ‘productive’.

The parties looked to set what constituted the costs practitioners incurred
prior to an IVA being agreed, which must be paid out before creditors receive
any payments.

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.

The IVA lobby group Debt Resolution Forum, which operates with the Insolvency
Practitioners Association as its secretariat and watchdog, was set to meet
yesterday to discuss the ‘unresolved’ issue of IVA fees at its conference.

‘While consensus on much exists, nothing has yet been agreed,’ said DRF
chairman Chris Holmes.

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