Reforming Insolvency Laws ‘can’t come soon enough’ as a court shuts down rogue Individual Voluntary Arrangement firm

By Harry Mottram: The customers of Vanguard Insolvency Practitioners (IVA) had no idea what they were being charged for as they commissioned the company to help them to negotiate their debts with creditors.

ICSM said the companies that used the IVA suffered a second piece of bad luck as not only were they in debt and struggling to survive but then were charged huge fees that had no details as to what they were for.

The Insolvency Service were tipped off that all was not right with the actions of the Vanguard Insolvency Practitioners and after investigations they took legal action against the firm eventually winding up the firm and its associates.

The Government’s Insolvency Service said in a statement: “The court heard that Vanguard was a ‘volume’ Individual Voluntary Arrangement (IVA) provider that enabled people in debt to come to an arrangement with their creditors to pay all or part of their debts. Vanguard charged customers a fee for facilitating their arrangements, which were supervised by Vanguard’s licensed insolvency practitioner.”

The Insolvency Service said that Vanguard traded from 2016 and used third-party suppliers to help administer the IVAs and realise debtors’ assets. By April 2020 Vanguard had more than 14,000 IVA cases under its management. Investigators found that between August 2018 and June 2020, Vanguard made payments to various third-party suppliers totalling almost £9 million from their customers’ estates under the guise of expenses or disbursements.

They said: “Some of the third parties under a fee sharing arrangement would then make payments to MDN Consultancy and KIS Financial Consultancy, who were connected to Vanguard through close personal or family relationships. Further enquiries discovered that Vanguard’s licensed insolvency practitioner, responsible for overseeing the IVAs, did not properly explain to customers what their fees were being used for. Investigators concluded that Vanguard’s practices lacked transparency as did the activities of its licensed insolvency practitioner.”

Ian Carrotte said that reforms to the insolvency industry currently under review by the Government could not come soon enough as there were regular incidents of ‘sharp practice.’

Claire Entwistle, Assistant Director of Investigation and Enforcement Services for the Insolvency Service, said: “Following a complex and lengthy investigation, the court recognised the severity of Vanguard and the connected companies’ activities before closing them down for good. This sends a strong message to volume IVA providers that if they do not deal with their cases properly and there is evidence of abuse, we will take strong action to protect customers and stop them.

“The winding up petitions have not affected the position of any of the IVAs previously under Vanguard’s control. These were taken on by another provider some time ago and consumers should continue to make payments in accordance with the terms of their agreement. Any customers who are concerned should get in touch with their IVA provider in the usual way.”

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk