I went out to feed the sheep tea biscuits this morning before heading to the office. What can I say, they like them. And as they stood there munching down on the treat it occurred to me that in a way, Insolvency Practitioners have been led down a path and into the Individual Voluntary Arrangement (IVA) pasture by creditors and the IPs are expected to be grateful for the cheap stale biscuits (reduced fees) the creditors want to toss to them.


The real sheep looking for treats this morning.

I’m having a tough time trying to reconcile the negative comments by creditors and others on the lending side when they slur Insolvency Practitioners by calling them IVA factories. The reason I struggle with it I guess is that creditors seem to be using that term as an insult, but at the same time send out instructions through their agents and engage in actions that prod, ZAPPP!, Insolvency Practitioners to adopt more efficient practices, just like a factory.

These automaton process and procedures are designed with one goal in mind, to push down the cost of an IVA to its most efficient level. They are designed to strip out waste and inefficiencies so costs can be reduced to the lowest possible for the benefit of someone. But who?

From a creditor point of view, I understand that they want to reduce costs, use maximum efficiencies and pay the least they can the same as you would for just –in-time delivered widgets.

But should Insolvency Practitioners be run out of business if they don’t comply with the creditor demanded efficiency project? Do we want to force Insolvency Practitioners to look at every possible new client like an order for a new Dell computer? In a way, don’t we want tour Insolvency Practitioners to be a bit sloppy? Keep reading.

I think that UK citizens and consumers should actually demand a bit of sloppiness because those inefficiencies are translated into care delivered on the frontlines. A single Insolvency Practitioner practice will never have the economies of scale that a Debt Free Direct has. That small IP office will never have the money for repetitive motion studies or funds to install the latest and greatest automation processes. They’ll never have the money to employ smart and bright executives to conduct in-depth market and research studies. In normal times that small practice will not be able to afford a bank of trained advisers, on the phone seemingly 24 hours a day to answer questions.

Now we flash forward to abnormal times where Insolvency Practitioners have been told to shape up or ship out. The orders are to play by the creditor rules and instructed efficiencies or have your income significantly cut and then potentially go out of business.

The services delivered by Insolvency Practitioners should not be forced to be at the greatest efficiency but should be about the greatest care and compassion offered by Insolvency Practitioners to consumers in trouble. That care costs money, and not the kind of money that is saved by sending electronic payments to the creditors.

Imagine a debtor in trouble, in pain, under stress and fighting with their partner because of debt problems. How is that person benefited by reducing Insolvency Practitioner income almost in half, by this point in time, with suggested or demanded changes? Now I can see the benefit to increased efficiencies for Insolvency Practitioners if fees are left alone. Those efficiencies would result in more time and care being delivered to the consumer. The Insolvency Practitioner could invest in more resources to serve the debtor in trouble. By leaving fees alone the small Insolvency Practitioner could also have funds to invest in automation which will benefit creditors.

I remember one day back in the States when I had invited management representatives from XXXX to attend a conference call with the client to discuss, in-depth, the causes and reasons for their debt and to work out a fair, reasonable and sustainable plan, just like the Individual Voluntary Arrangement (IVA).

Knowing that the XXXX guys were sitting in the room listening, and in a desire to show them how genuinely people want to pay their debt back, I asked the client what would be the one thing they would want people at XXXX to know if they could talk directly to them. The wife broke down on the phone and through choked tears said “We want them to know we are good people and just want a chance.”

The XXXX executives, that didn’t normally deal with consumers, were visibly moved by the lengthy call and the client’s statements. At the end of their visit I asked what could they do to help this person and they told me that there was not much because the creditor policies and procedures did not allow them to make the kind of needed changes to help that couple. Is that the type of system we want to stand behind?

So when I read quotes from The Insolvency Exchange website home page like “This rapid growth has resulted in lots of inefficiencies that add significant cost to the process, increase losses for creditors, restrict the accessibility of IVAs for debtors and ultimately make it more difficult for these debtors to get the best advice.” it makes me upset. How in the world does nuking Insolvency Practitioner fees help debtors to get better advice? It doesn’t and we can’t fool ourselves that these changes are not just to improve the creditors rates of returns and not to provide more help for people in pain. But you know what, look at The Insolvency Exchange site and make your own determination about what the creditor attraction and motivation is.

Or how about quotes like “The Insolvency Exchange (TIX) provides all the benefits of a central exchange to the IVA process – automation, standards, improved efficiencies, reduced costs, increased returns and, above all, increased control and certainty for all parties involved.” How does any of that actually translate into better care for consumers in pain? And those increased returns are for whom?

Hey guys at TIX, I’m not beating up on you. I can’t help the fact that you are the sharp end of the spear from the creditors and the ones publishing this stuff.

Everyone keeps talking about these issues like it is about cost containment, efficiencies and automated processing, but it’s not. Money problems are not about the money, they are about the underlying issues and those issues are not resolved with greater efficiencies. They are resolved with more resources and greater time.

In case you are wondering, I’m really not angry, but just like that movie “Network”, I’m mad as hell and I don’t think we should take this anymore.



So what are you going to do to tell UK creditors, government departments, debt professionals and Insolvency Practitioners trade groups that this is wrong, an abuse of power and an intolerable inaction by regulators and insolvency trade bodies and we need to do a much better job of putting the needs of the debtor client first? And if you need a good reason to stand up, it’s because it is simply the right thing to do.

Or, all that being said, here’s an alternative reality that I hope does not come true, but it might if nobody takes action. (Video contains adult theme)

Future Creditor Guide to IVA Compliance

Dear Insolvency Practitioner, from this point forward before a nominee fee may be earned there are three steps that must be completed. Step One,  cut a hole in the box.

I know, this is a stupid, gratuitous and juvinille video from Saturday Night Live, but hey, it might make you laugh and we could all use a bit of that right now.