Individual Voluntary Arrangements are complicated long-term legal agreements. A lot can change in your life during the 5,6 or 7 year term your IVA lasts.
Sometimes your IVA firm isn’t as helpful or sympathetic as you think it should be. You should always be treated politely and have things explained to you.
If there is something really wrong with the way your IVA is being handled, then you can and should make a formal written complaint.
Complaining has a bad image these days: it’s seen as weak, better to have a positive attitude and “get on with your life”. But in some situations making a complaint is absolutely your best option.
I need to point out the obvious – I don’t know what your problem is and I don’t know the terms of your IVA. I am also not a lawyer!
Some of this article may not be relevant for you and there may be other avenues that you can explore. You may sensibly decide you need help to lodge a complaint – see the bottom of this article.
Let’s look at a couple of common reasons people give for not wanting to complain.
“Complaining won’t make a difference”
Lots of people go into an IVA because they are scared about their debts, CCJs, bailiffs etc. Perhaps you feel your IVA firm are the experts, you know nothing and have to put up with whatever you are told.
But you aren’t powerless:
- an IVA is a legal contract where the exact terms matter;
- your Insolvency Practitioner (IP) is personally liable if you decide to go to court (NB this is very rare and I am not suggesting that you should!);
- your IP can potentially lose their licence, which means losing their job. Again this is very rare, but the point is that an IP has to act professionally. They can’t just tell you what to do if it’s not in accordance with the terms of your IVA;
- handling complaints can also be a difficult and time-consuming problem for the IP and the firm to deal with. They will want them sorted out as soon as possible.
“My IP will make me bankrupt if I complain”
Your IP may feel that answering your complaint is a nuisance, but this is not a valid reason to make you bankrupt.
The Insolvency Act 1986 says the court will only approve an IP’s petition to make someone bankrupt if they haven’t complied with their obligations in the IVA, they have supplied misleading information (this doesn’t mean a minor error or omission) or they haven’t complied with a reasonable request by the IP.
If at any point someone from your IVA firm says they will make you bankrupt if you don’t do X, you should ask them to explain in writing the clauses of your IVA you will be in breach of by not doing X.
It is incredibly rare for an IVA firm to make someone bankrupt except in extreme circumstances eg where you have inheirte4d money and are refusing to put it into your IVA.
Step one – get a reality check
You need to know that your complaint is actually reasonable. Things go wrong with IVAs and if something large has changed in your life it may be there is no chance of the IVA being completed.
This is especially likely if it has happened early in the IVA. Later when you have made a lot of payments already, there are usually more options. Read my article on What happens if you can’t afford the IVA payments, and see if that suggests potential ways to solve your problem.
But if your problems are the result of the cost of living crisis, or your mortgage or rent going up a lot, then there are new options, brought in in 2022. For example you can ask your IVA to have your IVA completed “on the basis of funds paid to date” so that it just finishes and doesn’t fail. See Help with IVAs if you can’t pay because of the cost of living for details.
I suggest you post on one of the IVA forums,e.g. theivaforum.co.uk or MoneySavingExpert. That will give you some feedback on whether you do have good grounds for complaining. You may also find that in replying to you, people write phrases that you can use in your complaint and give useful links.
Posting can be done anonymously but do name the IVA firm, because people may say if other posters have had similar problems with your firm.
On the forums you may get asked questions such as “is there a minimum dividend clause in your IVA?” or “what does it say about taking a payment break?” Look at your IVA paperwork:
- the IVA document and any annexes are the key items. If any of these are missing, ask your IP to send you a copy;
- any correspondence between you and the IP before the IP was proposed or during it.
It may seem confusing at first, but persevere and ask questions on the forum. The more you understand about your IVA, the better your complaint is going to be.
Step two – simply ask why
Before you lodge a formal complaint (step four below) it is a good idea to write to your IP stating your concern. Even the best firm sometimes makes administration errors or there may have been a misunderstanding.
You can find the email address for your IP from the IP directory.
Keep it short and use plain English rather than legal wording:
- don’t use the word “complaint” at this stage
- ask the firm to explain why you are being asked to do X, you don’t think you should have to because of Y
- if you would like a payment break or to propose a full and final settlement but your IP says you can’t, ask them to explain why
- say if you would like to speak directly to your IP.
Step three – background research
Whilst you are waiting for the reply, do some research on your IP and the company as this may help you with the next step:
- look up who authorises your IP;
- read SIP 3.1 – this is a Statement of Insolvency Practice for IVAs. This link is to the one issued by the ICEAW; the other bodies that authorise IPs have identical ones;
- read the Code of Ethics that your IP’s regulator publishes; here is ICEAW’s, where Section A and D are most likely to be of interest;
- find out who regulates your IVA firm. If they do other debt management work apart from IVAs, they should be FCA regulated and their website should say this;
- if you would like to know some factual information that could affect your complaint, consider putting in a Subject Access Request to your IVA firm. Do this as a separate email to the Step Two query and add a sentence on the end making it clear that this SAR is in addition to the query you sent them on dd/mm/yy.
This is all background information, you can read quickly, looking for things that seem relevant to your situation.
Step four – make a formal complaint to the IP
Your IVA firm’s website should have the details for how to make this formal complaint.
Don’t by-pass this step even if you know you have a serious problem (one exception that is actually very rare – if your IP informs you he is about to petition for your bankruptcy, you need professional help right away, see below).
Going through a formal internal complaint has the following advantages:
- if it works it will be quicker;
- it provides a way to reach a settlement without attacking your IP’s professional competence. If you complain to the IP’s regulator, it is less easy for them to back down because they may feel they have to defend their actions
- it may give you more useful information if you do need to take your complaint further.
Try to separate out the major issue from any subsidiary ones.
For example, if your main complaint was that your IP is telling you your IVA is going to fail when you think it could reasonably be marked as completed, you may have other complaints such as that you were initially misled about what an IVA involved and staff don’t return phone messages – list these other points after explaining the most important problem so that you don’t confuse it.
If you know what you want to happen, ask for this clearly, for example, “I would like you to confirm that I do not need to do X as it is not mentioned in my IVA terms.” Or “I would like my creditors to be asked to vote on whether my IVA should be completed on the basis of funds paid to date”.
Step five – make an external complaint
Just because this seems complicated doesn’t mean that your complaint is going to fail!
Your options depend on your specific case, so I’m just going to outline them briefly. Think about getting professional help to choose between these and to take them forward, see below.
(5A) complain through the Insolvency Service
You are not complaining about your IVA firm, you are complaining about your IP.
Complaints about an IP have to go to their authorising body, but the Insolvency Service has provided Insolvency Practitioner Complaint Form for you to use.
The Insolvency Service says:
The authorising bodies are not able to intervene directly in any insolvency case, nor to overturn the decision of an insolvency practitioner, nor that of any Court. They will consider any referral within the context of whether the actions or behaviour of the insolvency practitioner may result in the insolvency practitioner being liable to disciplinary action.
That may mean that you can’t see the point of making this complaint!
However there may be conciliation mechanisms that will help to resolve your dispute, even if the regulator lacks the legal power to force an IP to change a decision. This is worth doing even if you are skeptical.
(5B) court action
To overturn an IP’s decision you can go to court. If you are being told to do something that seems to be against the terms of your IVA agreement, or which is not mentioned in your IVA agreement, then this may be an option for you.
You need a lawyer to discuss how to pursue this. This would be a civil matter usually dealt with by a County Court, so the police will not be involved.
(5C) Complain to the Financial Ombudsman about mis-selling
The Financial Ombudsman (FOS) has no jurisdiction over the operation of IVAs.
But FOS can look at complaints about the advice to enter an IVA if the advice came from an FCA authorised firm:
- this could be your IVA firm – although many IVA firms are not FCA members;
- it could also be the firm you originally spoke to about an IVA that passed your details to your IVA firm. This would be separate and in addition to any complaint to your IVA firm.
There is also the problem that if your IVA is continuing, then any compensation ordered by the FO may even fall into your IVA under the windfall clause, although this may make it easier to get it agreed that your IVA has been completed.
If you think you need help with all this, contact your local Citizens Advice. A local Citizens Advice has access to the national specialist debt team, so don’t worry that the advisor you see hasn’t dealt with an IVA complaint before – it might be a good idea to show them this page! They will want to see your IVA documents and they will be very pleased if you can give them the ‘background research’ from step three above.
You may need a lawyer. Some CAB’s have lawyers, others will be able to refer you to a local Law Centre or other places for pro bono (i.e. free) legal help.
In 2022 there are legal firms saying they can win IVA mis-selling cases. It isn’t clear how successful they are though… and many want you to pay several hundred pounds for them to write a report, but it isn’t clear how much this report will help.