Date published: 01.09.08 - not release date

Lawyer calls for independent debt watchdog as latest insolvency stats released

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DWF386/07
2 February 2007

As the latest insolvency figures show another major rise in the number of Individual Voluntary Arrangements (IVAs), an insolvency law specialist is calling for the introduction of an independent regulator to clamp down on rogue practitioners in the industry.

Andrew Gregory, partner and head of business recovery at leading regional law firm DWF, fears that the industry’s attempts at self-regulation in the shape of the Debt Resolution Forum will not have sufficient teeth to punish cases of malpractice.

Statistics for the last quarter of 2006 show that there were 29,804 individual insolvencies (17,063 bankruptcies, and 12,741 IVAs) compared with 20,679 in the last quarter of 2005 (13,675 bankruptcies, and 7,004 IVAs), an increase of 44 per cent on personal insolvencies generally, a 25 per cent increase in the number of bankruptcies, and a massive 82 per cent increase in the number of IVAs.

Gregory believes that recent increases in interest rates and a rise in unemployment will ensure that personal insolvencies continue to increase. Coupled with recent news of sharp falls in the share price of some of the major companies providing IVA services will only add to the pressure on this industry.

The Debt Resolution Forum has been set up by the Insolvency Practitioners Association to promote best practice and is anticipated to have the power to fine members. However Gregory, whose team advises a large number of financial organisations including both banks and IVA providers, says: ‘Whilst the Debt Resolution Forum is a step in the right direction, the Insolvency Practitioners Association cannot force IVA providers to join or be bound by its rulings.

“Some potential members have already declined to join on the basis that it has failed to provide them with a definition of its standards, while the Department of Trade and Industry has announced that it does not endorse the new body.

“The IVA code currently being drafted by the British Bankers' Association and representatives from the debt industry will go some way to ensuring practitioners are operating on a level playing field.

“What is really needed is an independent regulator which has the power to ensure that the booming IVA market is properly policed and that all debt management providers adhere to the same standards and provide the correct advice, or else face the consequences,” says Gregory.


Notes to editors:

DWF is one of the fastest growing regional law firms in the UK and has recently merged with Ricksons. With over 800 people based in Manchester, Leeds, Liverpool and Preston, DWF provides a range of services grouped under the following practice areas:

Corporate
Banking & Finance
Litigation
Real Estate
People
Insurance

DWF has developed extensive sector-specific expertise in a number of areas including: automotive, education, food and resourcing.

Further information on DWF is available via www.dwf.co.uk

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Sam Dabbs
Dabbs PR & Marketing
Tel: 01939 210503 or 07050 108985
Email: sam@dabbsprm.com