It’s that time of year when failure rates for IVAs are published for 2022, and surprisingly, there isn’t much discussion surrounding them!
The recent statistics released by The Insolvency Service unveil several noteworthy insights including:
- A decrease in IVA Registrations: In 2023, there were 64,050 individual voluntary arrangements (IVAs) registered in England and Wales, marking a decline from the record high of 87,865 observed in 2022.
And termination rates:
- In 2022, one in 18 IVAs (5.6%) registered terminated within one year of approval.
- IVAs registered in 2021 had a two-year termination rate of 14.4%, which was higher than in previous years.
- The three-year termination rate for IVAs registered in 2020 was 15.8%, the lowest since 2013.
- Lifetime Termination Rates: Over the lifetime of an IVA, termination rates increased from 25% for IVAs registered between 2013 and 2014 to 33% for those registered between 2016 and 2018.
How does this compare to IVAorg?
Before delving into comparisons, it’s crucial to note that various factors contribute to these statistics. Although our dataset (the number of IVAs we handle as a percentage of the total) is significantly smaller, we can still provide a solid indication of what’s working and why.
Of the IVAs we’ve facilitated since 2019:
- 81% are still active.
- 17.4% have been successfully completed.
- Only 1.4% have failed.
That puts IVAorg’s IVA failure rate at less than 2%. Compared to an industrywide failure rate of over 30%.
Why the difference?
When we established IVAorg, our aim was to bring better transparency to an industry shrouded in secrecy and poor practices.
And, whilst the FCA have introduced some big changes around the marketing and referral of IVAs by introducer firms in late 2023, the truth remains that too many IVAs are being recommended to individuals by advisers who are being financially incentivised on the number of IVAs they onboard each month rather than any consideration being shown for what’s in each individual’s best interests.
At IVAorg, we operate differently.
Firstly, no one in IVAorg is incentivised on the number of IVAs we process. We prefer to invest time with each client, examining all their options with equal measure, and will only recommend an IVA if it’s deemed the most appropriate solution. This ensures we are outcome driven – not income driven.
Secondly, we stand by our ‘Social Pledge’ which states, “Should your IVA fail to complete successfully through no fault of your own, we pledge the fees you’ve paid for our services will be used to reduce your debt to maximum effect, leaving you no worse off for having tried to complete an IVA that subsequently failed.” Because of this simple pledge, you know that if you enter an IVA with IVAorg, you’re giving yourself the best change of achieving a successful outcome.
Our stats show that by adopting an effective and empathic approach in each case, whilst removing financial incentives and focussing on what’s in the best interests of each client, failure rates fall significantly.
In summary, if you’re considering an IVA, whether with IVAorg or another provider, take the time to scrutinise that organisation’s failure rates. Ask questions, and if the rates seem high, seek alternatives.
And if you’re an IVA provider seeking insight into how we’ve achieved the lowest rates in the industry, I invite you to get in touch (https://www.iva.org/contact) and find out more about our methods and how we’re doing it.
Ultimately, beneath these statistics and caveats, a significant number of individuals continue to grapple with everyday debt. As an industry, we must improve our ability to offer the right solution to the right client, maintain transparency with success and failure rates, and collaborate to deliver the best possible service to those in financial need.
