Forensic Review
Individual Voluntary Arrangement — specimen
Prepared by | Roger Wallis, Speak For You Ltd |
Report | Part 1 Forensic Review · Part 2 Forensic Options |
Income | State pension and benefits only |
Unsecured debt | £19,612.28 across nine creditors |
Arrangement | IVA approved September 2024, terminated August 2025 |
Age at inception | 76 |
Client | Mr Alan Prescott (not his real name) |
SPECIMEN
This is a real file. The client's name, the town he lives in, the insolvency practice, the practitioner, and the case reference have all been changed or removed.
Every figure, date, timing and finding below is exactly as it appears on the papers.
Executive summary
CRITICAL
Mr Prescott paid £732.00 into this arrangement. £585.60 of it was taken in fees and costs. £146.40 reached his creditors—a final dividend of 1.62p in the pound.
He was 76 when he signed, on a fixed income of state pension and benefits, to a 60-month commitment that would have finished in his 81st year.
He ended the arrangement himself, eleven months in, so that he could apply for a Debt Relief Order—a free procedure that the file had closed off at the outset on a margin of £47 a month.
Mr Prescott owed £19,612.28. The largest single creditor was not a bank: it was a Department for Work and Pensions overpayment of £10,156.80, a little over half of everything he owed.
The recorded surplus on his income and expenditure statement was £122 a month. The income ceiling for a Debt Relief Order is £75. He was therefore £47 the wrong side of a gate that costs nothing to pass through, and no one anywhere on the file tested whether that £47 was real.
It was not tested against the national Standard Financial Statement guidelines. It was not tested against his actual outgoings. It was recorded, and the free route was closed, and a 60-month arrangement carrying £3,650 of fees was proposed instead.
The whole proposal pack was signed 4 minutes 29 seconds after it was emailed to him. The fact-find, the statutory advice call and the signature all took place on the same morning.
Summary of findings
No | Finding | Severity |
|---|---|---|
1 | A Debt Relief Order was closed off on a £47 monthly margin that was never tested | Critical |
2 | 80% of everything the client paid was taken in fees; creditors received 1.62p | Critical |
3 | A 60-month commitment sold to a 76-year-old on a fixed income, ending when he was 81 | Critical |
4 | The proposal pack was signed 4 minutes 29 seconds after it was sent | High |
5 | Fact-find, statutory advice call and signature all completed the same morning | High |
6 | The largest creditor was a benefit overpayment, releasable in the free route not taken | High |
7 | Source of introduction recorded as "N/A" where a referring firm exists | High |
8 | The client terminated the arrangement to pursue the route he was told he could not have | High |
The findings in full
Finding 1 — the £47
A Debt Relief Order is free. There is no application fee, the approved intermediaries who submit it do not charge, and nothing is paid towards the debts during the twelve months it runs. At the end of it the debts go.
To qualify a client must have, among other things, surplus income of no more than £75 a month. Mr. Prescott's surplus was recorded at £122. That is the entire distance between a free procedure and a five-year arrangement carrying £3,650 of costs.
On the papers, that £122 was recorded and acted upon. It was not measured against the Standard Financial Statement guidelines that the industry uses and that the proposal itself refers to. On a benefits-only income with no vehicle and no property, £47 of movement is not an unusual amount to find. Nobody looked.
WHAT THIS MEANS
The question is not whether the surplus was £122. The question is whether anybody checked — and the file shows that nobody did.
Finding 2 — where the money went
Eleven months of payments produced the following:
Final dividend | 1.62p in the pound on claims admitted | |
Reached his creditors | £146.40 | 20.0% |
Taken in fees and costs | £585.60 | 80.0% |
Paid in by Mr Prescott | £732.00 | 100% |
Four pounds in every five that a 76-year-old man paid out of his pension went to the people who sold him the arrangement.
Finding 3 — the term
The arrangement ran for 60 months at £122, a total of £7,320, against a projected return to creditors of 18.71p in the pound. He was 76 at approval. It would have completed in his 81st year.
His income was state pension and benefits. It was not going to rise. There is nothing on the file recording any consideration of what a five-year fixed commitment means for a man of that age on that income — no assessment of health, no assessment of what happens to the arrangement if he dies during it, and no consideration of whether a procedure lasting twelve months might suit him better than one lasting sixty.
Finding 4 — four minutes and twenty-nine seconds
The electronic signature audit log records the proposal pack being emailed and signed 4 minutes 29 seconds later. A proposal of that kind runs to dozens of pages and binds the signatory for five years.
Four and a half minutes is not enough time to read it. It is barely enough time to scroll to the end of it.
Finding 5 — one morning
The fact-find, the statutory advice call at which the alternatives are supposed to be explained, and the signature on the proposal were all completed on the same morning. There was no interval in which he could have thought about any of it, taken free advice elsewhere, or spoken to anybody.
Finding 6 — the benefit overpayment
£10,156.80 of the £19,612.28 was a DWP overpayment. Overpayments of that kind are ordinarily released by a Debt Relief Order in the same way as any other qualifying debt, unless obtained by fraud. Over half of Mr Prescott's problem was therefore capable of being written off, at no cost to him, in twelve months.
Whether the overpayment was recorded as fraudulent is a matter to be established from the DWP file. It is not addressed anywhere in the proposal.
Finding 7 — the introduction
The statutory advice record enters the source of introduction as "N/A". The practice's own published material states that another firm refers customers to it for IVAs. Those two things cannot both be true, and which of them is correct affects whether a fee was paid for Mr Prescott's introduction and who therefore had an interest in the outcome.
Finding 8 — how it ended
In August 2025, eleven months in, Mr Prescott asked for the arrangement to be terminated so that he could apply for a Debt Relief Order.
He worked out for himself, unaided, what the file should have told him at the outset. By then £585.60 of his money had gone in fees and his creditors had received £146.40.
The four statutory routes, as they stood in September 2024
Route | Cost to him | He pays | Creditors get | Duration |
|---|---|---|---|---|
Debt Relief Order | Nothing | Nothing | Nothing | 12 months |
Bankruptcy | £680 | Little or nothing on a benefits income | Nothing | 12 months |
Debt management plan | Nothing at a free provider | £122 a month | 100p over c.13 years | c.13 years |
IVA (the route taken) | £3,650 | £7,320 | 18.71p projected; 1.62p actual | 60 months |
The Debt Relief Order was closed on a £47 margin nobody tested. Bankruptcy was available and costs £680, which he did not have, though it can be paid in instalments. The debt management plan clears the debt in full but would have run to his ninetieth year, which is no answer for a man of 76.
Which leaves the arrangement he was sold: the only one of the four that costs him five years and £3,650, and the only one that anybody earned anything from.
The published market position
Source: Insolvency Service, IVAs terminated September 2021–September 2023.
Measure | Published median | Mr Prescott |
|---|---|---|
Unsecured debt | £11,200 | £19,612 |
Monthly contribution | £100 | £122 |
Dividend to creditors | 22p | 18.71p projected, 1.62p paid |
Share taken in fees | 61% | 80% |
Time before creditors saw money | 2 years | Arrangement ended at 11 months |
Cases found unsuitable at the outset | 60% | - |
He is worse than the median on every line that matters. That is the point of the comparison: this is not an unlucky case, it is a normal case with the arithmetic showing.
Forensic Options
FIRST, THE MONEY STOPS
Where an arrangement is under review, the standing position is that contributions stop while the review is carried out. Money paid into an arrangement that should not have been sold is money that cannot be recovered afterwards.
Option one — the Debt Relief Order
This arrangement has already been terminated, so the obstacle that existed in 2024 no longer exists. The route now open to him is an application through an approved intermediary, at no cost.
Citizens Advice and Money Wellness both act as intermediaries.
What has to be established first is the surplus as it stands today, evidenced, and whether the DWP overpayment is treated as a qualifying debt.
Option two — a complaint about how the arrangement was sold
The findings above are matters for a complaint to the practice, and to the practitioner's regulator after that. Regulators have treated the incorrect exclusion of a Debt Relief Order as sanctionable conduct, including where the error was made by staff acting on the practitioner's behalf rather than by the practitioner personally.
What is in issue is the £585.60 taken in fees on an arrangement that should not have been sold.
Option three — the lending
The same file discloses how the debt was built. Where lending was advanced without a proper affordability assessment, there is a separate complaint to each lender and to the Financial Ombudsman Service after that, potentially recoverable.
What Mr Prescott is not asked to do
He is not expected to make the applications, write the letters, argue with anybody or deal with the practice. What he provides is the information and the decision about which route is taken. Where a step can only be taken personally — a Debt Relief Order application through an intermediary is one — it is prepared for him and he is taken through it.
What the work costs
The review and this report are free. Where there is work to be done afterwards, the fee is discussed and agreed before anything begins. It is less than was being paid into the arrangement, it is spread across nine months, and it does not start until the payments into the arrangement have stopped.
If a quicker and cheaper option is not found, the money is returned.
Roger Wallis
Author of Insolvency: The Truth
Speak For You Ltd