Major IVA firm Vanguard shut down for 'abusing' millions of customers' payments'

A FIRM providing Individual Voluntary Agreements to people struggling with debt has been closed down after abusing millions of pounds of customers' cash.

Vanguard Insolvency Practitioners and three connected companies have been wound up following an investigation by the Insolvency Service.

The organisation said it had 'abused millions of customers' payments".

Vanguard was the 6th largest IVA firm in 2018, 5th largest firm in 2019, 9th largest in 2020.

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.

An IVA is a way to avoid bankruptcy for those with debts of more than £20,000.

You set up an agreement with firms to pay back the money you owe to different companies, known as creditors, over a set period of time.

The arrangements have been used by celebrities, such as Katie Price.

A person's debt is frozen during the length of an IVA, typically between five and six years.

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But if it ends early, lenders can re-impose any or all of the frozen interest charges, pushing people further into debt.

IVA firms also charge a fee for the service, typically £1,000, which is added onto the debt, and many people don't realised that it will negatively affect their credit history.

Critics have warned of a possible mis-selling scandal after the regulator found that poor quality advice is being given to people in debt.

This could potentially lead to some people entering into an IVA when other options would have been more appropriate.

The government is expected to make changes to rules for insolvency firms following a consultation last year.

Serial abuse of payments

An investigation was launched by the Insolvency Service into Vanguard following complaints about its practices.

The Insolvency Service uncovered "serial abuse of the payments made by Vanguard’s customers".

The firm was set up in 2016 and had more than 14,000 IVA cases under management by 2020.

It used third-party suppliers to help administer the IVAs.

Investigators found that between August 2018 and June 2020, Vanguard made payments to using the cash from their customers’ estates under the guise of expenses or disbursements.

These payments totalled almost £9million.

Under a fee sharing arrangement these third parties would make payments to firms connected to Vanguard through close personal or family relationships.

Customers were not told how their fees were being used.

Winding up proceedings against Vanguard and associated companies were initially opposed, but at trial they were not not but did not make any admissions.

IVAs taken out that were previously with Vanguard are not affected at they have been taken on by anew IVA provider and consumers should continue making payments as usual.

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