As personal insolvencies reach yet another record high, a lawyer is warning IVA providers to exercise caution when advertising their services to the public.
Andrew Gregory, partner and head of business recovery at leading law firm DWF, says that firms in the IVA market must be careful not to exaggerate the benefits of IVAs when promoting their services. The warning follows a number of recent rulings by the Advertising Standards Agency (ASA) which concluded that adverts made by some IVA providers were misleading.
The ASA has now asked that IVA practices ensure that claims made in advertisements are based on an amount of debt that a significant proportion of consumers could expect to write off, taking into account the impact of fees.
His comments come as the latest insolvency statistics released today, show there were 13,233 IVAs in the first quarter of 2007, an increase of 47.6 per cent on the same period a year ago and a rise of 4.7 per cent on the previous quarter.
The number of bankruptcies at 16,842 was up 10 per cent on last year’s figures and 1.3 per cent on the previous quarter. The total number of personal insolvencies was 30,075, a rise of 23.9 per cent on the same period in 2006 and a 1.3 per cent decrease on the previous quarter.
Gregory, whose team advises a large number of organisations in the finance industry including banks, trustees in bankruptcy, and IVA providers, says we can now expect to see almost 130,000 personal insolvencies this year.
He adds: “With the ever increasing amount of personal debt in the UK economy it is good that consumers can choose from a range of debt solutions. However it is very important that the advantages of these solutions are not exaggerated and that IVA providers are careful not to make misleading statements.
“IVA providers must ensure that their advertisements are honest and open and accurately reflect the level of their fees and the minimum settlement that creditors are likely to accept. Creditors are no longer willing to agree to dividends with disproportionate administrative costs.
"IVA advertisements must reflect this commercial reality, or providers will face further intervention from the ASA and criticism from others in the industry, and risk causing longer-term damage to their reputation."
About DWF
DWF is one of the fastest growing regional law firms in the UK and has recently merged with Ricksons. With 820 people based in Manchester, Leeds, Liverpool and Preston, DWF provides a range of services grouped under the following practice areas:
Corporate
Banking & Finance
Business Recovery
Litigation
Real Estate
People
Insurance
Private Client
DWF has developed extensive sector-specific expertise in a number of areas including: automotive, education, food and resourcing. Further information on DWF is available via www.dwf.co.uk
|
