Creditors are imposing modifications on almost all individual voluntary arrangement (IVA) proposals despite the implementation of the IVA protocol, a report from the Insolvency Service has shown.

The report, which reviews the progress made by the protocol in standardising straightforward consumer IVAs, said protocol use has been increasing, with 85-90 per cent of proposals now protocol-compliant. However, compliant proposals still have an average of nine modifications imposed by creditors, compared with 15 for non-compliant IVAs.

IVA providers told the Insolvency Service that modifications had initially dipped when the protocol was introduced, but have been rising steadily since then. The service said the figures are "disappointing". However, it said modifications relating to home equity had reduced substantially and said: "The modifications in protocol cases are less than those in non-protocol cases, indicating that the protocol is succeeding in reducing modifications."

Steve Jackson of www.beatmydebt.com said that he felt it was unhelpful of creditors to be putting forward such a large number of modifications on protocol compliant IVAs. "It still seems that creditors are pushing people with serious debt problems towards the debt management plan route which many not be right for them." "This could leave them languishing in debt for many years" he commented.

Meanwhile, creditors said they include modifications to deal with fees as standard as they felt insolvency practitioners always pushed for higher than acceptable fees. They added that every proposal would be dealt with individually and none would be "nodded through".

The Insolvency Service said it is working on an updated version of the protocol, which will be available shortly and aims to deal with the issue of common modifications, such as the treatment of overtime and redundancy payments. The department said it intends to consider the implications of the report and is not considering revisiting plans for simplified IVAs, which were abandoned.

In a statement the IVA standing committee said a full evaluation of the protocol should be carried out within the next two years to allow a complete evaluation of its effectiveness.