Reduction in IVA approvals hits firm’s profits
January 8, 2008
Over the past couple of years many glossy advertisements have come out in relation to IVAs, and this has led to many struggling consumers with debts deciding to try the IVA route in a bid to rid themselves of debt more quickly and reduce monthly outgoings in the interim. However, although at one point IVA approvals were coming through thick and fast this has now dropped off and is hitting some firms hard in terms of profits.
In a recent report one firm, Debt Matters, has revealed that the poor performance of the IVA sector has resulted in massive losses and a very disappointing year. The firm stated that Pre-tax profits for the first interim to the end of September fell from £4.32m to just £346,045 compared to the previous year. The number of IVA cases has plummeted from a peak figure of around 600 per month to the current average of just 100 per month.
One official from the firm stated: “2007 has been a disappointing year for the Group. Well-publicised difficulties in the IVA sector have resulted in a significant reduction in approved IVA case volumes. Debtmatters had built an infrastructure over the previous two years to process these case numbers but the business model relied on direct marketing.”
He added: “Since the start of 2007 our case acquisition costs trebled in a matter of months and this, combined with a reduction in nominees’ fees from September 2007 of around 50%, forced the Group to undertake a strategic review of activities. This review is ongoing and a further announcement is anticipated early in the New Year.”
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