Julian Knight: A free offer is no way to come to a life-changing debt decision

The other day I received a press release that simply took my breath away. It was from IVA.com, the self-styled individual voluntary arrangement price comparison website. Normally, as far as I'm concerned, any release from a company involved in the sale of IVAs is automatically filed under bin – IVA firms rank as low as consolidation loan companies and no-win, no-fee law firms in my book – but this was so ill thought out and badly timed that I have to share it with you.

Under the headline "IVA.com strikes freshly baked deal with bread", the firm promised to give people who sign up with it for an IVA a free pay-as-you go payment card, called "bread", and top it up with £50.

There's nothing wrong with freebies but this one is highly inappropriate and abysmally poorly timed. Undertaking an IVA is an extremely serious step. It involves debtors who can't meet their repayments coming to an arrangement with their creditors to pay a proportion of what they owe – over, say, five years – on the proviso that they won't be made bankrupt.

OK in theory, but over the past few years IVAs have been abused. A plethora of IVA providers – often with names intended to suggest that this is a soft option – have aggressively marketed themselves to the public. People have been persuaded to sign up when all they really require is independent and free debt counselling. Often they end up living off a pittance and assailed by huge penalties if they fall behind with their scheduled repayments.

You can see, therefore, why the idea of offering an incentive to induce someone to make such a seismic financial decision is, to paraphrase IVA.com's press release, "half baked".

And not only that, but IVA.com's giveaway is also very badly timed. For a while now, banks have been getting twitchy about the huge growth in the number of IVAs taken out. In fact, of late, some have been turning down new IVAs.

Just over a week ago, sensing, perhaps, that the end was nigh for its nice little earner, the IVA industry pledged to turn over a new leaf. A voluntary protocol was launched under which providers would stop the aggressive marketing and even build some advice into the whole process. In short, IVAs would become more grown-up. But the banks I talk to are far from convinced that IVA providers will stop giving consumers the hard sell, and I imagine that IVA.com's £50 bread card offer will be more grist to their mill.