The Insolvency Practitioners Association (IPA) has announced a regulatory framework for the “continuous monitoring” of the use of Individual Voluntary Arrangements (IVAs) by the high-volume providers.
The Insolvency Service classifies high-volume as those firms that are responsible for two percent of the total number of IVAs annually. An IVA is one of the debt management solutions available to consumers, which allows individuals to enter into a binding agreement with their creditors to repay part of what they owe over a typical period of five years. An IVA must be supervised by an insolvency practitioner (IP) and the majority of IPs who work on IVAs are regulated by the IPA.
Announcing the regulatory regime, the IPA said: “The traditional method of regulation does not facilitate meaningful supervision of the high-volume providers who are reliant on technology to deliver the volumes of cases that are commenced each year."
As such, the IPA said it will introduce “a new way to regulate the industry” using continuous monitoring, with real time access to systems.
It is hoped the system will allow IPA inspectors target visits on those areas that require rapid improvement. The IPA also said it will expand its network of inspectors and bring in specialists to enable more frequent inspections. In practice, high-volume IVA providers can expect up to four visits a year, where there is usually just one, the IPA said.
Michelle Thorp, IPA chief executive, said: “The vast majority of IPs act with integrity and in the very best interests of their clients and stakeholders. Given the changing nature of the industry, we have been working to adapt our regulatory practices and this is an important improvement to how we deliver our obligations to regulate IPs in this sector. The outcome, which is a much more intensive regime, will be to improve trust and confidence in this sector and to enable us to help our IPs improve their working practices.
“The outcome for the consumer should be a greater degree of trust in the help they are getting at what can be an incredibly tough time. It will also provide confidence to creditors that the IVA process is transparent and that the regulatory framework meaningful and robust. I want to thank the industry for working with us to develop this new framework – it’s a demonstration of their commitment to this agenda, as much as ours as the regulator.”