Choosing an IVA Provider: Warning Signs and Complaints

Before choosing an IVA provider, check whether an IVA is suitable, who the licensed practitioner is and what the arrangement will cost.

In this helpful guide, we’ll explain:

• What an IVA is and how IVA companies work.
• How to choose the right IVA company for yourself.
• The signs of an IVA company to avoid.
• How to complain about an IVA.
• How to compare providers and free independent advice

From July to September 2023, the Gazette reported that there was a total of 13,965 Individual Voluntary Arrangements.¹ This figure highlights the importance of choosing the right IVA company —a decision that can indeed be tough.

Use independent advice and the provider’s written proposal to compare the benefits, risks and alternatives.

Let’s dive in.

Historical context: the statistic reproduced here concerns March to May 2021 in England and Wales. It is not a current insolvency count or evidence of an individual provider’s performance. See related guidance.

Companies to Steer Clear Of 

When you’re suffering from debt problems, the last thing you need is an issue arising from the debt solution you’ve opted for. 

An IVA can fail for several reasons, including unaffordable payments or changed circumstances. A failure alone does not prove that the provider gave improper advice.

If you are already in an IVA, ask the supervisor about resolving the problem, varying the arrangement or the applicable replacement procedure. Cancelling it can have serious consequences and is not the only possible route. See related guidance.

However, today, I’d like to talk about some telltale signs that you can look out for which will help you avoid these unethical IVA companies. 

Make sure that when looking at different insolvency practitioners, you have your eyes peeled for these red flags so you don’t end up in a worse situation than you were in the first place. 

Unrealistic Claims 

Always make sure to beware of IVA companies that make incredulous or unrealistic promises such as “reducing your debt by 90%”. 

A headline write-off percentage is not a personal prediction. Ask how it was calculated, what the eligibility criteria are and what fees and risks apply. Do not assume a particular percentage is guaranteed.

Unusually High Rate of Failure

You have the right to inquire about an IVA company’s failure rate. 

Failure rates need a dated source, a defined cohort and enough follow-up time. There is no universal 15% benchmark that identifies a good or bad provider.

Bad Reviews 

Of course, this ties into what I mentioned earlier about reviews of IVA companies. 

Reviews may help identify questions to ask, but they are individual reports and do not establish suitability or regulatory compliance.

Consider the content and dates of reviews alongside authorisation, fees, service and the written advice. A rating alone is not a complete assessment.

Provider names mentioned in the earlier guide

The following names appeared in an earlier 2023 list. This is historical context, not a current ranking or confirmation that every firm still offers consumer IVAs. Verify the present service and named practitioner before contacting a firm.

1. Financial Wellness Group
2. StepChange
3. PayPlan
4. Bennett Jones
5. Forest King
6. Begbies Traynor Group
7. Astute Financial.

The linked provider guide explains questions to ask; it should not replace independent advice about whether an IVA is suitable. See related guidance.

How do I Choose the Right One? 

Before you opt for any one company, it’s important to get debt advice to determine whether an IVA would even be the right choice for you or not.

Sometimes, IVA companies themselves offer free sessions to determine whether an IVA would be suitable for your situation or not.

You can also get professional debt advice from independent debt charities such as Stepchange and National Debtline.

Once you’ve determined that an Individual Voluntary Arrangement (IVA) is definitely the best debt solution for you, then you can start looking at IVA companies. 

When you’re trying to find the best IVA company for yourself, here are some things to look for: 

No Upfront Fees 

Free independent debt advice is available. Ask about any proposed upfront charge and distinguish advice fees from the approved costs of administering an IVA.

Before agreeing, obtain a full written fee schedule and an explanation of what happens to payments if approval is refused or the IVA fails.

Practitioner fees are commonly paid from IVA funds, but the actual proposal governs them. Check the arrangement rather than assuming no separate or initial fee can ever apply.

Do not pay for initial advice without understanding the service and considering free alternatives.

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Reputation and Reviews 

It’s a great idea to look up reviews online of IVA companies that you’re considering. 

Getting an opinion from individuals that have actually used an IVA company’s services can be a great indicator of what your experience will be like if you choose to opt for an IVA with them. 

Verify the current practitioner, legal entity and service rather than assuming that age or review count establishes quality.

A new provider is not automatically unsuitable and an established provider is not automatically safe. Check the same authorisation, suitability and fee information in either case.

It’s fairly easy to look up online reviews and find the IVA company that you think would work best for you. You should always do this before you opt to apply for an IVA with any organisation. 

Affordable Monthly Payments 

Of course, you’re going to want an Individual Voluntary Arrangement where your monthly payments are low and thus, affordable. 

IVA contributions should reflect a sustainable household budget and the terms approved by creditors. Fees affect how the funds are distributed.

Higher practitioner fees do not automatically mean higher monthly IVA payments. They may reduce the dividend to creditors, and the proposal should make their effect clear.

Compare fees alongside affordability, asset treatment, the consequences of failure and the alternatives. The lowest headline fee alone is not a suitability test.

When you’re planning a budget for debt management during your IVA, your insolvency practitioner is going to help you make it.

Ask the practitioner to explain the budget and respond to reasonable questions. Obtain independent advice if essential costs are being excluded or you feel pressured.

How Do You Complain?

The correct complaints route depends on whether the issue concerns insolvency-practitioner conduct or a separate regulated advice service.

Raise the problem with the named supervisor and firm, preferably in writing. A practitioner can change terms only within their powers or through the required variation procedure.

I recommend that you send in your complaint in writing and hold onto a copy for your records. That way you have proof of your complaint and when you sent it.

Complain first to the firm and named insolvency practitioner. Unresolved complaints about a practitioner’s conduct can go through the Insolvency Service Complaints Gateway to the relevant regulator. The Financial Ombudsman may handle a separate eligible complaint about regulated debt advice; it does not automatically cover insolvency-practitioner work. The FCA does not resolve individual claims. See related guidance.

The Complaints Gateway can refer qualifying conduct complaints to the practitioner’s regulator. It is not a general court appeal or a guarantee of compensation.

If the complaint concerns how the Insolvency Service handled its own service, use its published service-complaints procedure. GOV.UK is a website, not a separate adjudicator for an IVA dispute. See related guidance.

For allegedly unsuitable regulated debt advice, complain first to the advising firm or relevant principal. The FCA can receive intelligence about misconduct but does not decide your individual compensation claim.

Check the adviser’s actual permissions and any legal exclusion, as well as the practitioner’s licence. Different roles have different regulatory and complaint routes.

If you think that your debt management company did not give you the best advice, you should make a complaint.

An eligible complaint about a regulated financial service can normally go to the Financial Ombudsman after a final response or eight weeks without one. This route does not automatically cover the practitioner’s administration of an IVA.

A referral is normally due within six months of the firm’s final response, with other time limits also applying. Check the Ombudsman’s rules for the particular complaint.

Get independent advice about compensation or court remedies if necessary. Do not stop IVA payments just because you have complained; a complaint does not itself end or suspend the arrangement. See related guidance.

References

1. The Gazette – UK individual insolvency statistics: Q3 2023