There is now no doubt we are entering a period of significant change for the IVA market. In this post I look at how will those changes impact the volumes and values of IVAs for Creditors and ask - can Creditors, IPs and Consumers all benefit ?

For 7 years (2016-2022) IVA volumes have grown. Much of that volume was driven by introducer firms. We have also seen a significant increase  in the lower value IVAs, with contribution levels below £100 pre month now common.

Conversely, those with equity have been denied an IVA either because they are voted against by one or more of the largest voting agents or are not even proposed for an IVA  as IPS are aware they fall foul of the voting agents standard parameters.

So whist the volumes of IVAs had gone up, the value, at least to creditors, has gone down.  This could all be about to change. Why ?

Well, an awful lot has changed in the last 12 months. Introducer firms have been banned from charging fees. Creditors now have to consider Consumer Duty. The Insolvency Service has announced an investigation into potential miss selling of IVAs. Finally and most recently, the Chancellor has increased the debt level of DROs to £50K, doubled the car value allowance and removed the £90 fee previously payable.

Change was already happening. IVA volumes in 2023 decreased by over 25% They are now below the level they were at in 2018. Many now expect those volumes will continue to decline in 2024.

So volumes are now going down but can the value of IVAs to Creditors go up?

The increase in DRO debt limits will inevitably  swallow a number of the lower value IVAs, both those in current IVAs at annual review and those that would have historically been excluded from a DRO due to debt levels. This will drive up the average contribution levels for IVAs.

In addition impending changes to the way Equity is treated in an IVA proposal and the obligations for Creditors under consumer duty should  make it easier for those with Equity to access this valuable debt remedy.

So we could see IVAs looking a lot more like they did pre-2016 with lower volumes but more homeowners and higher levels of contribution. This will drive up the value of IVAs to Creditors.

For IP firms the opportunity now lies in higher value IVAs and the opportunity to secure IVAs for Clients previously excluded.

For consumers these changes should make it easier to ensure they end up on the right debt solution for their situation.