DebtAdvisoryCentre.co.uk - Straight talking on fees.

It's unusual to find an IVA provider admitting that debtors pay their IP fees so it's worth taking note when someone actually tells the straight unvarnished truth.

The Debt Advisory Centre spell out the truth on their web site and it's worth quoting what they say.

Their FAQs cover the question of IVA costs and they say quite simply that: "All the costs associated with your IVA are taken from the payments you make in to it. You don’t pay anything extra."

The Debt Advisory Centre also add - perhaps speaking volumes about other players in the 'debt industry' - that they do not pay or receive any undisclosed fees or commission.

No smoke and mirrors here. No playing with words. No misleading claims that somehow the creditors pay the IP fees.

This should not be remarkable. The principle of 'transparency' runs through all insolvency law like a golden thread but it seems that principle ends when it comes to selling IVAs.

The reference to 'extra payments' is also illuminating - suggesting malpractice elsewhere ? - because debtors should only have to make the payments agreed with creditors.

This is normally limited to the monthly contributions to the IVA fund. The IP should take their fees and permitted expenses from that money.

By law, the only money that an IP can take are the sums shown in the terms of the final (modified) IVA proposal. Demands for any additional payments would be unlawful.

The relevant section of the law here is Insolvency Rule 5.33 which limits the fees, costs, charges or expenses which may be drawn to those which (quote) ".... are sanctioned by the terms of the arrangement...."

Insolvency Practitioners are also bound by mandatory professional guidelines known as SIPs (Statements of Insolvency Practice) and one of these covers remuneration of insolvency practitioners.

The relevant version is SIP 9 and it also clearly spells out that: "Members should be aware that the drawing of remuneration otherwise than in accordance with the relevant statutory provisions (i.e. Insolvency Rule 5.33) will render them in breach of the law."

Couldn't be clearer.

So why is it necessary for some of the big players to throw up such a smokescreen of ambiguity around the question of fees ?

Insolvency Practitioners are placed in an extraordinary position of authority and trust and if they are not being straighforward and transparent about their fees - and everything they do - then they are simply exploiting the ignorance and vulnerability of debtors.