21 December, 2021
StepChange Debt Charity says that the proposals announced today by the Government on how insolvency services should be regulated in the future represent a significant improvement on the current situation.
The consultation suggests bringing all insolvency services under the auspices of a single regulator, extending the regime to cover firms and not just individuals, putting in place a proper redress scheme, and placing additional requirements on large ‘volume’ IVA providers. Taken together, these steps would constitute a far more robust framework compared to the current fragmented patchwork of regulation, much of it self-administered by the insolvency industry. They would also go some way to addressing the consumer harms associated with the high failure rate of IVAs at large providers.
StepChange Debt Charity and StepChange Voluntary Arrangements (the charity’s subsidiary which administers IVAs) will respond formally to the consultation by the deadline of 24 March 2022.
Richard Lane, StepChange Director of External Affairs and Operating Subsidiaries, says:
"As a debt charity offering the full range of debt solutions, including insolvency options, we have been concerned for a very long time about what we’ve been seeing in the wider insolvency sector. Sector performance of IVAs is poor compared to our own experience, which suggests that some people are being sold insolvency solutions which are simply not right for their needs. The lack of effective regulation – as highlighted last year in the FCA’s Woolard review - contributes to the problem as poor practice too often goes unresolved.
"These new proposals would tighten up the system and reduce those risks. While it will be vital that standard setting, authorisation, monitoring and sanctions are completely independent of the industry, our first reaction is that these are very much steps in the right direction."
Notes to Editors
- The Government’s consultation on the future of insolvency regulation can be viewed here
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