How IVA companies make money — and how to read their adverts
IVA firms are businesses, and there is nothing wrong with that — insolvency practitioners do real, regulated work. But you should know exactly where their income comes from before their advice shapes your decision, because it comes from one place: IVAs going ahead.
The two fees, plainly
Under the Straightforward Consumer IVA Protocol the nominee’s fee covers assessment, the proposal and the creditors’ meeting, and the supervisor’s fee covers administering your payments, annual reviews and distributions for the life of the arrangement. Creditors vote on both, they come out of what you pay in — not on top of it — and the proposal must state them — the fee amounts and worked examples are here; this page is about the incentive, not the arithmetic. Over a typical arrangement the combined figure commonly runs to several thousand pounds; your creditors receive what remains. None of this is hidden and none of it is improper. It simply means the firm is paid by the arrangement existing.
“Free debt advice” with an owner
Several large IVA groups operate advice brands that are genuinely free to use and FCA-authorised — and are owned by, or commercially connected to, the IVA provider they refer into. The advice may be competent and the disclosure is usually in the footer. But independence is structural, not tonal: the question to ask any adviser is “who pays you, and does your organisation earn more if I choose an IVA?” The FCA saw the incentive problem clearly enough that since 2023 it has banned debt packager firms from receiving referral fees from debt solution providers — the regulator’s judgment, in effect, that advice paid for by outcomes drifts toward the outcome that pays.
Reading “write off up to X%”
The advertising pattern across the industry is a large “up to” percentage with the qualifying detail beneath: up to describes the best cases, and providers’ own small print typically states what share of customers actually achieved the headline figure in the last year — read that line before anything else on the page. Two more phrases to translate: “government legislation” in IVA marketing refers to the Insolvency Act 1986, which created the IVA — there is no government scheme, backing or approval behind any firm; and write-off percentages depend on what you can pay, not on what an advert says. The percentage claims themselves are decoded in can you really write off 80–90% of your debt? An IVA that fails — and arrangements do fail when payments were set optimistically — leaves you with fees paid, time lost, and the debts back.
Five questions before signing any IVA proposal
What are the nominee’s and supervisor’s fees in pounds, and what will my creditors actually receive? What did you rule out, and why — specifically a DRO (free, if you fit its tests) and bankruptcy? What term are you proposing — 60 or 72 months — and how was my home’s beneficial interest assessed under the 2025 Protocol? What is this firm’s IVA failure rate? And would a free-sector adviser reach the same recommendation — which you can answer yourself, for nothing, before signing:
You never have to pay for debt advice. MoneyHelper (government-backed), StepChange, National Debtline and Citizens Advice all give free, confidential advice with no obligation.
This is not an argument against IVAs
An IVA is the right answer for a real set of cases — typically homeowners protecting equity, or steady earners with debts too large for a DRO who would lose too much in bankruptcy. The IVA guide makes that case properly. The argument here is narrower: let the person who recommends one have nothing riding on it.