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Lenders Vs IVA Companies

Lenders are warning IVA companies to take a 40% cut in their fees or face the probability of IVAs being rejected.

Currently IVA companies are free to charge whatever fees they see fit, however, this could no longer be the case.

The British Banking Association (BBA) are to meet the representatives of the debt management industry in London on Thursday 31st May. The meet is the result of rising anger over the costs of IVAs.

A spokesman for the BBA said:

We have held a series of working parties working on proposals for a code of conduct for IVA providers and we now want to pull this work together.

Currently fees by some IVA companies average around £7,500, and although the BBA cannot set a maximum price for IVA’s, they will be telling leading IVA providers that they will no longer pay more than £4,500 for each deal brokered.

Concern has kicked in regarding the summit and has hit IVA Company shares hard, with the value of 3 major IVA providers, Accuma, Debtmatters and Debt Free Direct all falling sharply over the last fortnight.

According to the Dept. of Trade and Industry, 44,000 borrowers entered into IVAs last year, a 450% increase since 2002 who saw 8,000 deals brokered.

The fees charged by leading IVA companies could be the result of lenders being stricter with accepting IVA proposals. A typical IVA borrower now has to repay between 40p and 45p of each £1 owed, this is up from 18p to 20p only 3 years before.

Click here for more information on Individual Voluntary Arrangements (IVAs)

Written by tani on May 30th, 2007

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