A reader asked:
I’ve been told I have to give my IVA firm my online banking login details so they can see my bank statements. Why do I have to do this? Yet another thing they never tell you before you sign up.
An Individual Voluntary Arrangement (IVA) can be a good debt solution for some people but it is a long-term formal legal contract which may not have been clearly explained at the start. Or you may not have focussed on some of the detailed points, which didn’t seem important.
To answer this reader’s question, I’ll look at why the IVA firm wants your banking statements, why you do have to supply these and whether this includes giving them your personal banking details.
When and why does an IVA firm want your bank statements?
In an IVA you agree to pay what you can afford to your creditors each month. Your IVA firm has set an initial monthly amount, but if your income rises or your expenses drop, that amount will be increased.
That is why almost all IVA firms ask for your bank statements at the start. They want to see what your income, rent/mortgage, council tax, insurance costs etc are.
Many firms ask for bank statements or payslips for your annual IVA reviews, to see if your monthly payments should be changed. And most will ask for them for the final “closing review”. Some IVA firms mainly use these to check your income. Some look in more detail.
This may feel intrusive but it is just part of an IVA. In practice, if you are spending £30 more on cigarettes and £30 less on food than the Income & Expenditure sheet that was drawn up at the start said, your IVA firm is unlikely to care.
Do you have to provide these statements?
Yes. See this clause in the 2016 Protocol:
8(2) You promise to give the Supervisor whatever type of accounts or details (or both) of your income and expenditure relating to your affairs, for whatever date and period, as the Supervisor may reasonably require.
Your IVA may not use those exact words but there will be an equivalent, sometimes the broad do all such things as the Supervisor reasonably requires.
The IVA firm has to verify your income and expenditure and asking for bank statements is a reasonable way to do this.
Do you have to provide online banking login details to an IVA firm?
This sort of request is new in 2017 as the technology to utilise the information is just starting to be used. Creditfix has several thousand of its customers signed up to it.
You do NOT have to do this. You have to provide the information in your bank statements, but this can be paper statements if you want.
But there are advantages for you in using this sort of technology to supply the information to your IVA firm:
- you don’t have to bother with physical bank statements (many people don’t get these anymore) or completing a form;
- nothing can get lost in the post;
- it should be much faster for your IVA firm to analyse the date and complete your review.
So, as they will be convenient for you as well as your IVA firm, have a look at exactly how the IVA firm is proposing to access your bank accounts. If this feels safe and secure enough to you, it may be worth it.
How secure is this?
If they are asking for your banking username and password to be given to them on the phone, by email or letter I suggest you tell them to get lost. You should never ever do that.
I don’t think they will be asking for that. Creditfix, which is asking a lot of its customers to give them online access to bank accounts, certainly isn’t.
It is much more likely that you will type in your details into a secure application which then downloads your banking details through a process known as screen scraping. In this case, your IVA firm is not going to keep your login details in its files so they can’t be lost in a data breach and it is impossible for an employee to steal your details.
Banks say screen scraping is insecure, see Banking Association calls for end of ‘screen-scraping’. The banks want to restrict access to your data so it has to go through their own applications. But is this really a security issue? I am not aware of any case where a customer has lost any money because of it… and it would put a lot of the banks’ new competitors out of business… it feels a lot like big banks trying to protect their profits.
I recently reviewed a couple of savings apps that use screen scraping: Chip and Plum. I am happy enough with the security to use them myself and I think many people will be, but this is your decision. If you aren’t sure, here are some questions to ask your IVA firm:
- how long will you keep my login details?
- who will be able to see them?
- are you using a technical services provider, if so, are they FCA-authorised?
- are there any circumstances in which you will pass my login details or the details of my bank account transactions to anyone else?
So do you have to hand over your banking details?
As part of your IVA, you have agreed to supply your IVA firm with details of your income and expenditure. Bank statements are a convenient way to do this.
You can refuse to supply your online bank account login details and instead send bank statements to your IVA firm. But there are advantages in using this new technology, so don’t automatically reject it. Have a look at the security aspects and ask your IVA firm if you need to know more details.