Revised Statement of Insolvency Practice 3.1 – Individual Voluntary Arrangements
Under the Joint Insolvency Committee’s (JIC’s) strategic work plan, Statements of Insolvency Practice (SIPs) are subject to periodic review to ensure they remain relevant to changing legislation and market conditions. A revised SIP 3.1 relating to Individual Voluntary Arrangements has been issued following the work of a JIC working group and the approval of each of the Recognised Professional Bodies (RPBs).
Following consultations with the profession and other stakeholders, including the Insolvency Service, HMRC and major creditor representatives, a revised version of SIP 3.1 – Individual Voluntary Arrangements, has now been approved by the JIC and the RPBs for implementation with effect from 1 March 2023.
Summary of Changes
The principal changes in the revised SIP 3.1 relate to the degree of emphasis on the IP’s responsibility to ensure that the debtor has received suitable advice, both prior to entering an IVA and during its implementation. This includes ensuring that the debtor is aware of all potential debt relief solutions available and that they are provided with adequate time to think about the consequences and the options available before instructing an IVA to be drawn up.
Where the debtor comes to the IP through a referrer, the IP should make themselves aware of the nature and extent of the advice previously given to the debtor and collect evidence of such advice. The IP should ascertain whether referrers that have advised the debtor are FCA authorised or exempt for debt advice purposes and document their status. If there are any shortcomings in the advice, the IP is required to provide the appropriate advice themselves.
The revised SIP 3.1 includes a greater emphasis on documenting the process, including, where appropriate, advice calls, and on providing information to creditors that is more extensive and useful to them than before.
There is also a focus on providing tailored information and advice relevant to the debtor’s particular circumstances rather than relying on generic explanations and standardised texts.
The changes are set out in the comparison between the revised version and the current (2014) version of SIP 3.1.
Publication and Implementation
The revised SIP 3.1 will apply to IVAs where the Nominee is appointed on or after 1 March 2023.