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schemes deviating from Citizen’s Advice Bureau guidance ravage UK finances | Personal Finance | Finance

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More Britons forced into debt repayment schemes with very high fees (Image: Getty)

More than two-thirds of suggested ‘IVA’ debt repayment schemes deviate from Citizens Advice guidance, with the average proposed fees for these schemes nearing £4,000, a new study shows.

Individual Voluntary Arrangements (IVAs) are formal and legally binding agreements between a borrower and their creditors to pay back over a set period.

The study by financial service Abound, which looked into 200 recently proposed IVAs, found 71 percent of the proposed schemes — those drafted by the IVA firms in agreement with the borrower and submitted to the lender for approval — were for debts of less than £10,000.

However, Citizens Advice does not recommend IVAs for people with total debts less than this figure because of the high fee and the acknowledgement that “better options are available.”

Gerald Chappell, CEO and co-founder of Abound and author of the study said: “Many proposed IVAs are of questionable benefit to customers. They trade short-term payment reductions for long-term financial consequences which customers frequently do not understand.

Man looking worried at bills

Britons struggling with debt are being urged to approach their lender before settling for an IVA (Image: Getty)

“In many cases, customers could have achieved superior financial relief by engaging directly with their lenders, or by arranging a Debt Management Plan via a free debt advice charity like StepChange that would not require an insolvency process.

“IVAs are often sold to vulnerable and indebted people in an unethical way, and it seems clear to me that this is motivated by the large fees involved.”

Alongside IVAs being proposed for individuals with smaller debts, concerns have been raised over the high fees that they charge. Of those IVAs proposed, Abound found fees currently average £3,854.

According to the study, around 47.7 percent of the proposed proceeds from the IVAs would have, if accepted, gone to the IVA provider as opposed to 52.3 percent to the creditors, to pay down the original debt.

Of those IVA schemes that were accepted, 54.4 percent of proceeds went to the creditor and 45.7 percent of proceeds went to the IVA firm.

A small number of the accepted IVAs appear to be unfavourable consumers, with two in the sample having a fee constituting 80 percent or more of the proposed IVA.

IVA fees are typically the first thing the customer pays back. If the customer defaults and exits the IVA, sometimes they will be left with the same debt, despite paying a significant amount to the IVA firm.

But with IVA firms increasingly using social media platforms such as Facebook and TikTok to advertise the option as an “easy way” for people to write off their debts, concerns are stirring that people may be unaware of the risks.

People may not realise until too late that IVAs can significantly affect their credit ratings and stay on file for six years.

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These revelations come as Ofcom consults on the enforcement of clauses in the Online Safety Act 2023, which can see social media firms fined up to 10 percent of their annual revenue for hosting misleading or harmful online ads.

Mr Chappell said: “The fact that such a high proportion of IVAs go against official advice indicates a serious problem and I would question whether consumers know the serious long-term impact that an IVA can have on their financial future.”

However, he noted: “It’s important to add that an IVA can be a suitable solution for someone with large debts or assets to protect.”

To avoid unnecessary fees, Abound suggested three checks borrowers should make first before turning to an IVA.

Firstly, those in financial difficulty and worried about paying back a debt should speak to their lender about their situation. Lenders will often be able to agree on an affordable payment plan directly.

According to Abound, lenders are regulated and are required to act to ensure good outcomes for retail customers, which includes treating them fairly and supporting customers in financial difficulties.

Secondly, the experts suggest speaking with a free debt advice charity like Step Change. They can help people assess their financial situation, put together a debt repayment plan, and negotiate with lenders on the person’s behalf. In many cases, Abound said this can be done without the need to go through an IVA.

Finally, Abound suggested remaining alert and cautious about promotions on social media, such as adverts for quick ways to get rid of debts with no consequences. The firm said if it sounds too good to be true, “it probably is.”



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Trump To Meet President Xi During China Visit: What’s On Agenda?

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US President Donald Trump will pay a state visit to China from May 13 to May 15 at the invitation of Chinese President Xi Jinping, a spokesperson from the Chinese Ministry of Foreign Affairs (MFA) said.

Senior US officials have indicated the meeting between both leaders will address several high-stakes topics, including Taiwan, Iran, AI technology and nuclear arms. The talks are also expected to focus on whether both nations will continue their strategic critical minerals pact, according to Reuters.

After more than half a year without direct talks, the leaders of the United States and China are preparing for a face-to-face meeting aimed at preventing further deterioration in ties strained by trade tensions and geopolitical conflicts, including the US-Israeli conflict with Iran.

Trump is expected to land in Beijing on Wednesday. This is the first time in nearly a decade that Trump will be visiting China.

ALSO READ: Putin Hints At Possible End Of Ukraine Conflict During Victory Day Address

Trump-Jinping Meet: What To Expect?

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Economic relations are likely to dominate talks between Trump and Xi Jinping, with both sides expected to explore greater investment opportunities. Washington has recently pushed what strategy analysts refer to as the “Five B’s”, centred on Chinese imports of Boeing jets, US agricultural products such as beef and soybeans, and the formation of trade and investment panels designed to separate low-risk economic cooperation from sensitive security issues, reported The New York Times.

Beijing’s negotiating priorities have centred around the “Three T’s”: tariffs, technology and Taiwan, with China maintaining its longstanding claim over the island. Chinese officials are expected to seek continuation of the trade truce reached last year while urging the United States to relax restrictions on advanced chip exports that China sees as vital for economic and industrial progress. Jinping is also expected to raise concerns over Washington’s ties with Taiwan during discussions with Trump.

According to an official cited by Reuters, US and China may formally introduce plans for new trade and investment bodies at the upcoming meeting, but the mechanisms would likely need additional refinement before implementation. Discussions are also set to include the future of the trade ceasefire that currently permits the export of Chinese rare earth minerals to the US, although it remains uncertain whether an extension will be agreed upon this week.

A senior White House official, speaking to reporters on condition of anonymity on Sunday, indicated that Trump could push China more aggressively over its economic dealings with Iran, including oil purchases and the supply of products that may have both military and civilian uses. The comments came days after US Treasury Secretary Scott Bessent alleged that China was “funding” Tehran, Al Jazeera reported.

China’s relationship with Russia could emerge as another major topic during the talks.

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“The ‌President has ⁠spoken multiple times with General Secretary Xi Jinping about the topic of Iran and about the topic of Russia, to include the revenue that China provides to both those regimes, as well as dual-use goods, components and parts, not to mention the potential of weapons exports. I expect that conversation to continue,” an official said as per Reuters. 

Trump has frequently highlighted his personal rapport with Xi Jinping, often referring to him as “a friend”, while signalling hopes of attracting increased Chinese investment into the United States. However, analysts remain sceptical that the talks will produce a sweeping economic breakthrough, with more limited agreements and an extension of last year’s trade truce viewed as the most realistic outcome.

“The entire world will be hoping that the two leaders can reach agreement on at least a subset of issues … and find ways to prevent any further escalation of tensions on the remaining ones,” Eswar Prasad, professor of economics at Cornell University, told CNBC.

The previous face-to-face meeting between Trump and Jinping took place in South Korea last October, where both leaders agreed to halt an escalating trade conflict marked by steep US tariffs on Chinese imports and Beijing’s threat to curb rare earth exports.

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IndiGo, SpiceJet, GMR Drop 4% As PM Modi Urges To Avoid Foreign Travel

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Aviation stocks tumbled after the opening bell on Monday, May 11 following Prime Minister Narendra Modi’s appeal to citizens on avoiding foreign travel, adopt Covid like measures and save fuel in light of the ongoing crisis in the Middle East.

So far, Interglobe Aviation, IndiGo’s parent lagged the most, trading 4.44% lower at Rs 4,322 apiece, followed by SpiceJet, which dropped 4.15% to Rs 13.41 and GMR Airports fell 3.67% at Rs 97.6 per share.

The recent dip comes after PM Modi appealed citizens to help conserve foreign exchange reserves, save fuel and avoid unnecessary foreign travel, overseas vacations and foreign weddings. Additionally, he urged citizens to reduce petrol and diesel consumption by using metros and public transport wherever available, and opting for car-pooling when private vehicles are necessary. 
 

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Suspended TMC Spokesperson Riju Dutta Says He Was Punished for Speaking Truth

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Suspended TMC spokesperson Riju Dutta on Sunday launched a scathing attack on his party, alleging that corruption had been institutionalised.

A day after being suspended for six years for alleged breach of party discipline, Dutta questioned why people in West Bengal now felt “free to express themselves without fear” following the BJP’s electoral victory.

“Why have things come to such a stage? Why are people celebrating? We did not introspect,” he told reporters.

The suspended leader alleged that money was demanded for almost every civic-related work.

“From installing commodes in homes to getting building plans approved, money had to be paid everywhere. There was hardly any work for which people did not have to pay the TMC,” Dutta alleged.

He also referred to the school jobs scam and said the allegations of “job theft” should have been given serious attention.

ALSO READ: 450% Higher: How Bengal CM-Designate Suvendu Adhikari’s Net Worth Compares With Mamata Banerjee

“If someone says jobs were not stolen, that would be a grave sin,” he said, adding that whenever he tried to raise such issues within the party forum, he was ignored.

Earlier, in a video message after the BJP’s victory in the state, Dutta had thanked BJP leaders for what he described as their “courtesy” and “protection”.

“The BJP’s central and Bengal leadership openly told me to continue doing politics fearlessly according to my ideology and beliefs and assured me that my family would not be harmed,” he had said.

He also mentioned BJP MLA Ritesh Tiwari for extending support and claimed that many TMC leaders were keen to join the saffron party.

Dutta also apologised for his past personal attacks on BJP leaders during political campaigns.

Reacting to his suspension, Dutta said he had devoted 13 years to the party and risen through “hard work and performance”.

“I am not a nepo kid. Yet my beloved party suspended me because I spoke the truth,” he said in a social media post.

He further claimed that the party’s disciplinary committee accused him of not appearing before it despite his having submitted a written reply at the party headquarters within the stipulated time.

“Perhaps the suspension notice had been typed even before my reply notice was read,” Dutta said.

ALSO READ: Meet Suvendu Adhikari: From Mamata Banerjee’s Aide-Turned-Foe To BJP’s Bengal CM-Designate

The TMC on Saturday suspended three of its spokespersons, including Dutta, for six years over alleged anti-party remarks made following the party’s defeat in the West Bengal Assembly elections.

According to a statement, spokespersons Kohinoor Majumdar, Riju Dutta and Kartik Ghosh were suspended for allegedly violating party discipline.

Dutta drew attention after praising the BJP government’s measures to curb post-poll violence in a social media post. The notices were issued by TMC MP Derek O’Brien, who is a member of the party’s disciplinary committee.

Besides the three suspended leaders, notices had also been served on Krishnendu Chowdhury and Papiya Ghosh.

The party had sought explanations within 24 hours, asking why disciplinary action should not be initiated against them for “breach of party discipline”.

According to party leaders, some spokespersons had publicly questioned the leadership’s functioning and campaign strategy after the electoral defeat.

A senior TMC leader said the party would respond to Dutta’s allegations “at the appropriate time” and questioned why he raised the issues only after the election results.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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