Access-to-ivas - epetition reply
29 February 2008
We received a petition asking:
"We the undersigned petition the Prime Minister to Bring about a fair balance between the rights and responsibilities of consumer debtors and their bank and financial institution creditors, and enable as many people in debt as reasonably possible to have fair access to the full benefits of insolvency legislation by bringing in a) legislation to enforce the Banking Code and b) at least until that is in place, relaxed best practice requirements in relation to the IVA personal insolvency procedure to take account of the bank's present actions."
Details of Petition:
"Banks and consumer credit institutions appear to be ignoring their responsibilities under sections 2 and 14 of the Banking Code by acting unfairly towards people who owe them money and are in financial difficulties. At the same time they are using their concerted power to force those setting up IVAs, arrangements under between people in debt and themselves, to act in certain ways which adversely affect those in debt and which in some cases denies those people access to use the legislation. The insolvency legislation is for all of us to use if and when appropriate, and while there may always be some limiting factors over its practical usage those factors should not be dictated by the banks and financial institutions."
Read the Government's response
The Government is fully committed to ensuring that individuals in financial difficulty are able to deal with their debts, whether through formal statutory procedures such as bankruptcy or IVA, or informal debt management processes. This in itself recognises that there must be a fair balance between rights and responsibilities of debtors and creditors.
In terms of IVAs, the Government has sought to apply legislative change where improvements could best be achieved in that way. The proposed introduction of Simple Individual Voluntary Arrangements is an example of this. However, at the same time it recognises that it is better in many cases to seek agreement between the various parties as to how insolvency procedures should work in practice, within the legal framework.
To this end a draft protocol was finalised and agreed at a forum held on 29 January 2008, and took effect from 1 February 2008. The protocol makes it clear what is expected of both creditors and debtors and removes some of the uncertainty about what constitutes best practice within the IVA process.
The presentation to delegates at the forum and a full copy of the protocol and associated documents can be found on the Insolvency Service website.
Further Information
Young People's website