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More questions raised by Individual Voluntary Arrangement Statistics

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Iain Ramsay

http://www.kent.ac.uk/law/people/academic/Ramsay,_Iain.html

The Insolvency Service published (here) on 27th January  further statistics on Individual Voluntary Arrangements.

The latest IVA statistics (here) indicate that  40 percent  of  IVAs commenced in 2007 were terminated (ie not completed). Although this reduced to 32% in 2009, ten percent of IVAs commenced that year are still ongoing.

A government programme with a failure rate close to 40 percent would result in parliamentary questions, an investigation by the government and possibly radical change. In a previous post I suggested further investigation was necessary of  the role of Individual Voluntary Arrangements.

The Insolvency Service data also indicate that the IVA industry is now dominated by a few providers. Two firms have 50% of new IVAs in 2016 and ten firms over 80%.

We know little about whether these repayment plans are effective treatments for overindebtedness.  Unfortunately there seems little interest in attempting to fill this gaping hole in empirical knowledge of the insolvency system. Policy making on IVAs is effectively privatised through low visibility committees (here) dominated by creditors and intermediaries. Perhaps the Financial Conduct Authority  should take a greater interest.

In my forthcoming book (here) I describe English policymaking on personal insolvency since the 1980s as ‘drift, layering and conversion’. The consumer IVA represents the private conversion by enterprising accountants of a remedy designed for corporate directors and businesses  to a mass-produced remedy for consumers. It is time that there was a proper appraisal of whether it serves the public interest. The government seems willing to review corporate insolvency(here) but demonstrates little interest in a comprehensive review of the byzantine personal insolvency law  landscape in England and Wales.

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