Stricter regulation needed as personal insolvencies set to rise by 17% in 2018

Following the release of the Q1 2018 Insolvency Service insolvency statistics today, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company, calls for stricter rules when promoting insolvency services online:

 “The figures released by the Insolvency Service today, showing an increase in both company and personal insolvencies, support our expectation that the number of individual voluntary arrangements (IVAs) and Trust Deeds will grow by around 17% in 2018. Our latest research reveals a similar trend; with the number of cases continuing to rise. March saw a record volume of IVAs and Trust Deeds issued (around 6,500), up by 20% on the same period last year.

“One of the main drivers of this growth, along with increases in consumer borrowing, is the contraction of the debt management sector due to some large providers entering administration, and tighter Financial Conduct Authority (FCA) regulation. As providers of debt management services exit the industry, insolvency service providers are stepping in to fill the void. Some of these companies use persuasive online marketing via Facebook and other social media platforms to target those suffering from financial stress.

“Insolvency solutions can generate good outcomes for consumers and creditors as a last resort but early identification of problems can help to avoid personal insolvency, which has serious and long-lasting consequences for people’s ability to access credit in the future. Enacting an IVA or Trust Deed can have a detrimental effect on; an individual’s credit rating, the cost and access to rental accommodation, the affordability and cost of mortgages.

“More needs to be done to regulate and keep pace with changing ways insolvency solutions are marketed. At present, the regulation of the debt and insolvency industry is fractured. The FCA is responsible for debt management and debt collection while the Insolvency Service oversees personal insolvency. We are calling for a single body to provide end-to-end regulation covering quality of consumer advice, obligation of creditors, as well as ongoing oversight and auditing.”

Following the release of the Q1 2018 Insolvency Service insolvency statistics today, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company, calls for stricter rules when promoting insolvency services online:

 “The figures released by the Insolvency Service today, showing an increase in both company and personal insolvencies, support our expectation that the number of individual voluntary arrangements (IVAs) and Trust Deeds will grow by around 17% in 2018. Our latest research reveals a similar trend; with the number of cases continuing to rise. March saw a record volume of IVAs and Trust Deeds issued (around 6,500), up by 20% on the same period last year.

“One of the main drivers of this growth, along with increases in consumer borrowing, is the contraction of the debt management sector due to some large providers entering administration, and tighter Financial Conduct Authority (FCA) regulation. As providers of debt management services exit the industry, insolvency service providers are stepping in to fill the void. Some of these companies use persuasive online marketing via Facebook and other social media platforms to target those suffering from financial stress.

“Insolvency solutions can generate good outcomes for consumers and creditors as a last resort but early identification of problems can help to avoid personal insolvency, which has serious and long-lasting consequences for people’s ability to access credit in the future. Enacting an IVA or Trust Deed can have a detrimental effect on; an individual’s credit rating, the cost and access to rental accommodation, the affordability and cost of mortgages.

“More needs to be done to regulate and keep pace with changing ways insolvency solutions are marketed. At present, the regulation of the debt and insolvency industry is fractured. The FCA is responsible for debt management and debt collection while the Insolvency Service oversees personal insolvency. We are calling for a single body to provide end-to-end regulation covering quality of consumer advice, obligation of creditors, as well as ongoing oversight and auditing.”