independent

Friday 18 April 2014

Expert defends €3k fee for failed insolvency bid

Joe Arkins

A FINANCE expert has defended charging a man thousands of euro for work on an insolvency deal that failed.

A complaint has been made to the new Insolvency Service of Ireland about the charges.

The high costs of new insolvency deals has led to criticism that most heavily-indebted consumers will not be able to benefit from them.

Critics have argued that only those heavily indebted people who have a high income or assets like buy-to-lets will be able to secure a new personal insolvency deal.

Galway-based personal insolvency practitioner (PIP) Joe Arkins charged almost €3,000 for preparing a personal insolvency arrangement that was ultimately rejected by ACC Bank.

The initial fee was €3,500, which was paid on account by the bust borrower who is based in a town in Co Galway.

This was subsequently reduced by €578 and the €578 was returned to the borrower, which meant the payment ended up being €2,921.25, a copy of the invoice seen by the Irish Independent shows.

The borrower is now seeking to be declared bankrupt after ACC Bank turned down an application for a personal insolvency arrangement (PIA) – a five- to six-year arrangement to deal with mortgage and other debts.

COST

Mr Arkins, who runs an accountancy and auditing practice in Galway as well as being a PIP, said the final cost would have been €5,500 if the PIA had gone ahead.

He said the fee had been agreed by the client in advance of the work being carried out. And he insisted it was explained that the charges would apply even if the PIA application was not successful.

A complaint about the fees charged has been made by David Hall of the Irish Mortgage Holders Organisation, who is now assisting the borrower to have himself declared bankrupt.

Mr Arkins was not aware of the complaint made to the Irish Insolvency Service.

"The client signed a letter of engagement. If the Insolvency Service contacts me I will send them the full correspondence and deal with it. There is no merit to any complaint," he said.

Head of the Irish Insolvency Service Lorcan O'Connor said PIPs are required to outline the likely cost of an debt deal in advance to consumers.

Any complaints received will be investigated by the ISI regulation division in accordance the Personal Insolvency Act 2012, he said.

Irish Independent

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