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IVA Review Board launches defence - 05/02/2010

The founder of a consumer debt advice firm has mounted a staunch defence of its practices in light of criticism from industry commentators.

Ian Smart, who founded Intl Marketing and the IVA Review Board, defended the IVA Review Board’s conduct of sending letters to debtors in individual voluntary arrangements (IVAs) suggesting they may no longer be required to make their IVA payments.

Smart categorically denied any links to the IVA Council which gained notoriety in 2008 for contacting people in IVAs and claiming they had been mis-sold the arrangement.

Although the Office of Fair Trading revoked the IVA Review Board’s licence on 18 December it is currently under appeal. Smart said: "The OFT has not made any comment about our business model, trading practices or conduct.

"The OFT claims that we are associated with a number of companies, but the only evidence it can produce for this association is some at-arms-length business transactions which were conducted, along with the coincidence that we rent offices from a third party landlord which were previously rented to one of the aforementioned companies."

An OFT spokesman said that they were unable to comment until the outcome of the case was revealed.

Smart added: "Every business in the insolvency industry has the same target market, people in financial difficulty. It is clear that insolvency practitioners approach people using various marketing techniques which include not only traditional advertising but also more subtle methods such as networking and blogs. There is evidence to show that in some cases, once they have established contact with a debtor through these avenues they are guilty of taking advantage of the debtors’ distressed situation."

He said that his firm had calculated that 20 per cent of the people the IVA Review Board speak to are in an IVA for the right reasons, either because they have an asset such as home equity, a job to protect or express a particular desire to make repayments to their creditors.

Of the remaining 80 per cent, Smart said the firm advises half not to exit the IVA because an income payment order or arrangement (IPO/ IPA) would be equal to or higher than their IVA contribution. The remaining percentage, Smart said, decide to proceed after concluding that bankruptcy would be the financially better decision for them.

Smart said: "We have never and will never suggest that a bankruptcy would be better for the debtor unless we can justify this statement. We are fully aware that if we lied to our customers and led them along a route that would not benefit them we would then be subject to rightful criticism and examination."

He added: "IVA factories regularly bend the rules or give poor advice simply to close their sale. IVAs are routinely being used to hide assets from creditors. The IPs simply rely on information given by the debtor and items such as cash, overseas properties and other realisable assets are overlooked. On the other hand a bankruptcy order is an honest solution allowing the trustee to examine the debtor’s situation in full."