20 July, 2021
The Financial Conduct Authority (FCA) has today announced it has taken action against 5 ‘debt packager firms’ - otherwise known as IVA (Individual Voluntary Arrangement) lead generators - stopping them from providing regulated debt advice. This comes following concerns over firms failing to properly manage conflicts of interest, manipulating income and expenditure figures, trying to promote products without properly explaining the risks, and providing inappropriate advice.
Commenting on the announcement, Peter Tutton, Head of Policy at StepChange Debt Charity said:
"Action by the FCA and Insolvency Service to reform the IVA market can’t come soon enough. For too long, consumers have faced significant barriers to getting the help they need – instead of free, impartial debt advice, many are falling prey to IVA lead generators.
"In 2018, the Insolvency Service highlighted how the commercial relationship between lead generators and Insolvency Practitioners was incentivising inappropriate advice. Since then, bad practice by lead generators has continued. If IVAs are to work for everyone, lead generators and IVA providers must be properly regulated, while firms should be required to guarantee that any leads they pay for are not the result of misleading or illegal online promotions by lead generators at any point in in the client acquisition chain. Dealing with problems such as these will help ensure high quality, free debt advice is available to the financially vulnerable people who need it."
Notes to Editors
- Debt Packager Firms are for-profit companies which typically take a client through the first steps of debt advice, by evaluating their budgets and recommending them a solution. The debt packager firms will then refer those clients on to solution providers, receiving a referral fee for the process. These fees are often higher when a client is referred for an IVA than other debt solutions.
- StepChange has previously commented on IVA market performance measures, urging action to address market failings.