Debt management firms to agree code

01 Jun 2007

The debt management industry has moved a step closer to agreeing on a set of rules that should raise standards and crack down on excessive upfront charges.Providers of individual voluntary arrangements (IVAs), which allow overburdened consumers to clear agreed levels of debt without going into bankruptcy, have thrashed out a working code of conduct with banks after months of talks.

The new set of standards is set to come into effect formally within the next few months and will see IVA firms sign up to a self-regulatory protocol governing advertising and the sales process. Lenders and IVA providers are also set to revamp the charging structure, which could see fees spread out more evenly over the life of the arrangement.

The number of IVAs hit 44,331 last year - eight times more than in 2002 - while the number of providers has mushroomed to around 100.

Lenders have become increasingly worried over the proliferation of the debt repayment arrangements, with financial institutions such as HSBC and Northern Rock voicing fears that they were not always in the consumer's best interest.

Government watchdog the Office of Fair Trading rapped 17 IVA firms at the beginning of the year over adverts deemed misleading to consumers, with some falsely claiming that up to 90% of debt could be written off.

Source:
http://www.channel4.com/news/articles
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