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On the eve of what is sure to be Alistair Darling's most important political statement there is speculation and counter speculation about how he will address the situation of the UK economy next...
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Thursday 31st May 2007
Insolvency practitioners and banks are meeting later today in a bid to reach agreement on contentious areas surrounding individual voluntary arrangements (IVAs).
IVAs have become a popular way of managing debt problems thanks to the huge growth in personal debt in the UK. They are legal contracts between borrowers and lenders which allow people to pay off a proportion of their debt and write off the rest.
Companies specialising in IVAs make their profits by charging banks a fee for organising the repayment, from £4,000 up to £8,000. But banks claim these fees are too high and are calling on insolvency practitioners to rethink them.
Stakeholders from both sides of the finance fence have expressed their enthusiasm to "nail the detail".
Speaking on BBC Radio Five Live, Eric Leenders of the British Bankers' Association said he wanted the establishment of "some hard and fast proposals that everyone can sign up to".
"That would include of course process efficiencies and certainly would help consumers because of course we'd be looking to far more simplified paperwork which would be much more accessible I would say for them," he said.
Nick O'Reilly, vice president of the Association of Business Recovery Professionals, said he welcomed the "opportunity" of today's meeting and said a lot of progress had been made in the last few months.
"I think it's probably a question that banks don't necessarily understand the work that insolvency practitioners have to do to put a voluntary arrangement in place," he said.
"What we're… moving towards is a system whereby a certain proportion of the fee is paid first but the insolvency practitioner firm waits for a while to get the balance of their fees, and I think that's probably helpful to all parties."
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