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. If there is something badly wrong with the way your IVA is being handled, then you can and should make a formal written complaint.
This article looks at how to make a general complaint about an IVA. A typical situation could be that it has been a long while since you made your last IVA payment but you haven’t yet received your completion certificate – there is an article here that discusses why this is a problem and how long a delay is “acceptable”.
I need to point out what may already be 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 may not be relevant for you and there may be other avenues that you can explore. You may also well 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 worried or even scared about their debts, CCJs, bailiffs etc. You may feel there is a huge power imbalance – the IVA firm are the experts, you know nothing and have to put up with whatever you are told. But you have more power than you realise:
- 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!) then you don’t sue the company that organised the IVA but your IP;
- your IP can potentially lose their license from the body that authorises them, 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 your IP (or one of the staff working for the firm if you can’t get through to talk to your IP), 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 are said to be in breach of by not doing X.
Step one – get a reality check
You need to know that your complaint is actually reasonable. Things go wrong with IVAs, five years is a long time 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 in, 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.
Essentially a complaint has to be about the way your IP has handled the situation, not about the situation itself. If any IP is likely to have done the same thing, it is unlikely a complaint will achieve anything.
I suggest you post about your problem on one of the IVA forums,e.g. iva.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 previous posters have had similar problems.
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?” This is a good time for you to get very familiar with 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 get a cup of tea and persevere :) The more you understand about your IVA, the better your complaint is going to be.
Step two – 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. Don’t delay doing this by trying to write the perfect email – keep it short and use plain English rather than try to get legal wording right:
- 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 or have a meeting with them.
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:
- find out 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 is the most likely to be of interest, but also possibly Section D;
- find out who regulates your IVA firm. If they do other debt management work apart from IVAs, they should either be FCA regulated or have interim permission. If you seem to be drawing a blank with this, check if they have a parent company that is registered, or if the name you know is just a trading name and the actual company name is different. Sleuthing around their website and Google can normally sort this out;
- look for a badge on the firm’s website (or its parent’s website) saying it is a member of a “trade association” and if they are, see if there is a Standards Code published, for example DEMSA’s one here.
This is all background information, you can skim read it just keeping your eye open for things which seem relevant to your situation.
Step four – 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 – if your IP informs you he is about to petition for your bankruptcy, you need professional help right away, see below). Your instinct may be to “bring in an outsider” to solve your problem, but going through this formal internal complaint has the following advantages:
- it will usually be a quicker way to resolve things;
- it will usually be a better way to resolve things – regulators may not be able to make your IP change a decision; going to court may involve costs etc
- it provides a route for you and your IP to reach an agreement without attacking their professional competence. If you force things to the next stage and 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.
When you are writing it, try to separate out the major issue(s) from any subsidiary ones. So 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 subsidiary complaints such as that you were initially misled about what an IVA involved, the IP’s staff are rude, don’t return phone messages, or that you have been unable to speak to the IP yourself despite asking – list these after detailing your main issue so that you don’t confuse it.
If you know what you want to achieve, 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.”
If the background research turned up anything interesting, consider mentioning this at the end: “It seems to me that you may be in breach of xxxxx which says that you have to xxxxxxx.” This is effectively a marker that if your complaint isn’t resolved internally you will be pursuing it further. But unless you are very sure, don’t bother, you don’t have to mention them now to take up the points later.
Step five – external complaints
If you have previously deal with PPI reclaims or had an argument with an insurer, you are probably thinking that the next step is to put in a complaint to the ombudsman who is presumably the Financial Ombudsman. Unfortunately the Financial Ombudsman only has very limited jurisdiction over IVA matters. And not only are there eight regulators of IPs but these regulators don’t have the legal power to overturn an IP’s decision and it may be that going straight to court is a better option for you. In my opinion, there is a proverbial dog’s breakfast of a regulatory system for IVA clients at present. The government is consulting about improvements but you have to work with the current framework.
Remember, just because it is complicated doesn’t mean that your complaint is going to fail. Which one or more of the next four types of action you take is going to depend on your specific case, so here I’m going to outline them briefly. You should consider getting professional help to choose between these and to take them forward, see below.
(5A) complain to the Insolvency Complaints Gateway
All complaints to your IP’s authorising body have to go through the central mechanism set up by the Insolvency Service described here.
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.” Which 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. And by this stage you may well be feeling cross enough to make a complaint even if you don’t benefit directly from it.
(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 the best option for you. This would be a civil matter usually dealt with by a County Court so there is no point in trying to get the police involved. One common-law remedy is damages for breach of contract but you could be asking for other things and you need a lawyer to discuss how to pursue this.
(5C) complain to the Financial Ombudsman about mis-selling
The Financial Ombudsman has no jurisdiction over the operation of IVAs. The FO will have jurisdiction over the debt advice process before your IVA was agreed, so if you think you were ‘mis-sold’ an IVA, then complain to the FO about this.
There is a problem with this mis-selling complaint. No ombudsman in the world has the power to travel back in time, and if you should have gone for bankruptcy or had a Debt Relief Order instead of an IVA, or you should have sold your house, then the FO cannot arrange for one of these options to have happened a few years ago. If your IVA fails, you effectively have to sort out what is your best debt solution now.
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.
(5D) complain to trade associations
Your background research may have turned up some possibilities here if it seems that the firm has breached any of the Codes of Conduct it has agreed to. This is going to be a nuisance for the firm rather than doing you any good directly.
If you think you need help with all this, contact your local Citizens Advice Bureau. All CAB advisors have access to CAB Specialist Services, so don’t worry that the advisor you see hasn’t dealt with an IVA complaint before – it might however be a good idea to show them this page! They will obviously 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.
If you can afford to pay (and most people in IVAs can’t!) then you need to find a lawyer who has experience in this area – the lawyer who did your conveyancing, however competent, is unlikely to be able to help. Google for terms such as “insolvency dispute litigation IVA” and phone a few up to discuss your situation – ask about the likely cost and what you might hope to achieve. ]