BusinessBusiness RecoveryInsolvency Practitioners ‘not to blame’ for mis-sold IVAs

Insolvency Practitioners 'not to blame' for mis-sold IVAs

Northern Rock's criticism of mis-sold IVAs prompts strong reaction from insolvency trade body R3

Insolvency trade body R3 has hit out at claims by Northern Rock that its
surge in bad debts has been caused by missold IVAs.

R3 said it was ‘staggering’ that the bank had blamed inappropriate IVA
selling by practitioners as
increasing
its provision on unsecured loans
to £55.9m from £33.5m over the
past six months compared to a year earlier.

‘I find it staggering that Northern Rock are seeking to lay the blame for
their poor lending decisions at the door of IVA providers. Insolvency
practitioners don’t lend the money and they don’t spend it. They offer a
solution to help people sort out their debt problems,’ said R3 vice president
Nick O’Reilly.

‘I will be writing to Northern Rock asking for evidence of their claims that
9 out of 10 people have been recommended IVAs that are not in their interests.’

Northern Rock chief executive Adam Applegarth said that ‘nine out of ten’ IVA
proposals were unrequired and the individual only needed to reorganise their
finances, reported the Daily Telegraph.

‘We have a problem with practitioners of IVAs and refuse them if we don’t
think they are in the customers’ interest.’

Capital One was the last bank to call into question the IVA process,
announcing that it was looking to cap its fees paid to
practitioners.

Further reading:

Capital’s fee cap doesn’t fit all

IVA providers face crunch meeting today

Insolvency industry and banks thrash out
IVA fee structure

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