Debt management firms could face strict caps on the fees they charge their customers under new industry guidelines being drawn up this week.

The clampdown follows latest figures for January to March 31 which show the number of people in Sussex declaring themselves insolvent continuing to rise.

Providers of individual voluntary arrangements (IVAs), which allow debt-laden consumers to clear agreed levels of debt without going bankrupt, could see their charges drop by almost a third under new proposals.

Banks are in talks with debt management groups to establish guidelines after a number of concerns were raised over fees and practices employed by IVA providers.

It is thought that lenders may push for charges to be capped at just £4,500 - a fraction of the average £7,000 fetched by IVA firms in set-up fees.

The new fee structures and regulated industry guidelines are expected to be unveiled on May 31.

HSBC and Northern Rock have condemned the boom in IVAs, saying they often were not in the consumer's best interest.

Banks argue that tens of thousands of Britons are being allowed to effectively "walk away" from their debts while debt management firms bag bumper profits.

The issue is a serious one for IVA firms, given that a minimum of 75 per cent of creditors need to approve an IVA for it to become legally binding.

The demand for IVAs has soared in recent years as consumer debt levels have risen, with the number of IVAs growing seven-fold between 2001 and 2006.

There are now 7,074 bankrupts in Sussex and 2,241 have taken out IVAs. Meanwhile, the latest figures show a rise of one per cent in people petitioning for bankruptcy in the first three months of the year from 460 in 2006 to 465 in 2007.

Brighton stood out with the biggest increase at eight per cent up from 295 cases in the first three months of 2006 to 320 for the same period this year. Nationally 15,356 people bankrupted themselves and 11,299 agreed an IVA.

Mark Sands, director of personal insolvency at KPMG's offices in Gatwick, said: "The number of IVAs has shot up by 48 per cent to 11,299, despite our research showing that in the first quarter more than 18 per cent of IVA applications by consumers in financial distress were rejected, double the rejection rate seen last year."