Memorandum from the Insolvency Practitioners
Association (IPA)
1. The NAO published its Helping Over-Indebted
Consumers Report on 4 February 2010, on which the PAC is due
to take evidence from the BIS Permanent Secretary on 15 March
2010.
2. The NAO reported that around a quarter
of BIS-funded face-to-face debt advice agencies were either refusing
new clients or had waiting periods of over one monthand
that against a background of an expected increase in demand and
increasing pressures on public expenditure. There is no composite
data about the numbers of over-indebted consumers who seek advice
from the private sectorthe NAO Report refers to "the
growing role of the private sector": it has been suggested
that the numbers at least equal, if not exceed, those who approach
funded advice agencies. What perhaps is also not fully recognised
is that insolvency practitioners, as well as reputable debt management
companies, generally provide initial information, analysis and
advice without chargeprimarily by telephone or internet
which are widely advertised and which seem to be their debtors'
preferred delivery channels.
3. The NAO recommends that BIS should assess
the role that all debt advice providers, including the private
sector, could have in meeting government's aims for debt advicea
recommendation which the IPA strongly supports.
4. But looking only at advice seems, in
the IPA's view, to be looking only at part of the issues in and
about helping over-indebted consumersthere is a compelling
need to join up all the dots on the landscape and putting in place
a coherent and comprehensive debt advice/protection/relief/repayment
framework. That was the thrust of the recent IPA Response to the
BIS/Insolvency Service Consultation on their proposed Reform of
Debtor Petition and Early Discharge Procedures[3]in
summary:
While the government has launched various
proposals for addressing issues in and about personal insolvency
stemming from its multi-departmental Tackling Overindebtedness
initiative, there is now something of an impression that these
are proceeding as separate, rather than joined up, streams with
elements of overlapfor example individual voluntary arrangements,
statutory debt repayment plans and administration orders.
The debtor bankruptcy application proposal
provides the opportunity to, but it singularly fails to, address
a more fundamental issuea continuing gap between the government's
broader objectives for and its delivery of a modern insolvency
system, oft-stated by Ministers and The Insolvency Service, that
"where debtors can pay, they will pay"; that it should
provide "fair returns for creditors"; and that "bankruptcy
should be the last resort".
A single insolvency "gateway"
approach would direct debtors into the procedure which delivered
fair returns to creditors but without any diminution in protection,
relief and rehabilitation, and certainly in relation to "can
pay/should pay" debtorssee Addendum to the IPA Response.[4]
5. While debt solutions fall outside the
scope of the NAO Report, and therefore the matters immediately
before the Committee, nevertheless the IPA would invite it to
take into account the need for effective and efficient debt solution
mechanisms alongside advice provision.
9 March 2010
3 Not printed here. Back
4
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