The Insolvency Practitioners Association (IPA) has published their 2023 VPR report with commentary from David Holland, who has presented at 2 of the Consumer Duty Services (CDS) 'in person' events in March and May 2024 around predicting the sustainability of IVAs. The Insolvency Service also supported these events.

There are some useful statistics around the reasons why consumers didn’t choose bankruptcy or an informal debt remedy (e.g. DMP) starting on page 28. In terms of consumer objectives, the DMP section highlights that a meaningful percentage prefer a fixed duration for their debt remedy and the legal protection. On the bankruptcy side, protecting assets was the main reason for not choosing it. The bankruptcy fee is another factor/blocker, which was meaningfully discussed in my 'Barriers to Entry' workshop in May as part of the personal insolvency reform programme.

Volume providers represent 67% of the market (i.e. 250,072 cases from a total of 372,4881 cases at the end of December 2023). CDS, along with Finvence, have analysed the outcomes of a significant number (nearly 250k) of IVA cases since 2017.

Quote from VPR report:

“In 2024, there will be greater emphasis on the role creditors have after the FCA changes to hashtag#ConsumerDuty by ensuring that the profession is sustainable, that individuals are able to complete their chosen solutions once they are assessed as insolvent and they are able to complete their journey.

"Currently around 20% of IVAs fail and this is largely due to a change in circumstances after the IVA has started. Conversely, this means that currently around 80% of IVAs are completing and creditors are receiving repayments that help the wider economy and individuals are, in the majority of cases, writing off over 50% of their initial debt and becoming debt free."

One of the stated IPA aims is to assist in reducing the failure rates. The IPA is an advocate for a change in the IVA Protocol to allow more IP discretion and consistent outcomes for individuals. This is especially true for homeowners and those where equity exceeds debt (sometimes by a small margin).

A useful read for all in the debt sector. Dave Holland is advocating more outcome data across all UK debt remedies, both formal and informal debt solutions, which DEBT MANAGERS STANDARDS ASSOCIATION LIMITED supports. Kevin Still provided details on revoked DROs and Bankruptcies subject to an IPA/IPO after the 'Barriers to Entry' workshop, which included whether credit restrictions should be amended and the frequency of some formal debt remedies (e.g. DRO).

CDS strongly promote a data driven approach and more engagement by creditors in the IVA voting process.


Read the report here