Charles Turner, partner at FRP Advisory LLP and Conference Chairman opened the day by welcoming delegates with his view that, whilst bankruptcies have hit a 5 year low, we are not at a five year low in terms of personal insolvencies overall, which remain close to record levels.
Debt Relief Orders, a recently introduced streamlined alternative to bankruptcy, have taken off and largely explain the drop in bankruptcy numbers.
The number of IVAs remain high. Charles commented:
“Given that unsecured debt levels are almost as high as ever at £216 billion, there are strong indicators that the insolvency profession will continue to have an important role to play in providing effective personal insolvency solutions for debtors and creditors alike.”
Ray Watson, Director of the Consumer Credit Group at the Office of Fair Trading, addressed the forum on the Consumer Credit Licensing regime.
His presentation included the findings of a debt management compliance review conducted by the OFT as a result of which 129 licensed businesses were warned that they had three months in which to prove that they had improved their systems, failing which action would be taken. The IPA is providing the required verification of improvements made by a number of DRF member companies.
Nick Howard, Director of Policy at the Insolvency Service addressed the conference on the subject of their recent “call for evidence” about debt management. Debt remains at record levels and personal insolvency is increasing. It is a key time to take a holistic look across the range of solutions we have.
They wish to ensure that people in financial difficulty should be able to access the most appropriate debt remedy. Nick Howard asked “What are the problems with the current debt management solutions and how can they be improved?” He concluded by reminding the delegates that the formal process, which can be found on the Government website, closes on 10 December after which the results will be advised to ministers. “This is your opportunity to submit your opinions.”
There followed a group discussion on the issue of the Call for Evidence. One aspect of this examined the question of whether there is a role for a “gatekeeper” to provide a common entry point to all formal insolvency procedures and if so, what would be the benefits and costs, who would perform such a function and how would the system operate?
The afternoon session involved a second group discussion titled ”IVA Protocol – Is it Working? Michael Peacock from IVA Watch at Grant Thornton commented: “From a creditor’s perspective we think the protocol is a significant improvement” but he suggested a debate around more flexibility to allow practitioners to keep IVAs on track when debtors find themselves having to cope with unforeseen temporary difficulties.
So what conclusions were reached at the conference?
That an increasing number of people perceive bankruptcy as an easier option.
There is a desire amongst the industry specialists to cut down on the need for formal variations to IVAs when a more flexible approach might work.
A recurring problem is the issue of fees and we must ensure that the creditors’ approach to fee approvals is realistic and reflective of the amount of work involved, particularly in non-standard bespoke arrangements.
Voluntary arrangements remain much maligned, and whilst they are often the best option for the creditors they are not always the best option for the debtor. The industry should persevere and ensure the agreements are always of a high standard.
It was agreed that the event had generated a good debate, with people not afraid to voice views.
Carl Faulds, President of the IPA said:
“We split the conference into two key sessions, the first to discuss the BIS/Treasury Call for Evidence and the second to examine the IVA protocol. In terms of the call for evidence the debate clearly gave people additional thoughts on their likely submissions and we will certainly be including some in our own response.
"During the afternoon session there was a very interesting discussion on the subject of further streamlining of the protocol process which will be discussed at the IVA standing committee next week. So in conclusion we had a very good event, with a wide range of participants and we have received some very good feedback.
"This sector deserves its own event focusing on the issues faced by its specialist practitioners. As this week’s conference demonstrates, there is a demand for a forum through which these firms can debate topical issues.
"I am proud that the IPA has shown the initiative and been able to facilitate that, and we will now take some of these points forward in the coming weeks through our own Personal Insolvency Committee and beyond.”
