The Korean
Hapkido Institute

Insolvency Consultation – What Respondents Think

A company experiencing financial distress, or perhaps facing the possibility of it, could benefit significantly from the advice of an experienced insolvency practitioner. These professionals are authorised to advise on and take appointments in all formal procedures including liquidations, voluntary arrangements, administrations, receiverships and bankruptcy. Their role is to guide businesses through a complex legal and procedural process whilst protecting the interests of all parties. However, it is essential that you have confidence in the regulatory framework under which these individuals operate.

Consequently, the consultation sought views on how to strengthen the existing system of regulation and provide those impacted by insolvency proceedings with confidence in the profession and the regulatory regime. The government’s preferred option to achieve this was to replace the current model with a single regulator of insolvency consultation Practitioners situated within government, specifically in the Insolvency Service, and taking responsibility for setting professional, ethical and educational standards as well as authorising, regulating and disciplining Insolvency Practitioners and firms offering insolvency services.

However, in the light of the detailed responses received to this consultation the government has decided not to implement such a model at this time. It believes that while the safeguards set out in the proposal would ensure the new body is able to maintain independence from government, the proposed model may not be sufficiently effective to improve trust in regulation.

It also remains persuaded that the way in which standards are currently set by Insolvency Practitioners and their RPBs is not fit for purpose and should be reformed. The government intends to work with stakeholders to develop a new approach to standard setting and, should this involve legislation, will introduce this when Parliamentary time allows.

There was widespread support for a public register of regulated Insolvency Practitioners and firms offering insolvency-related services. However, there were concerns about the level of detail to be recorded and concerns about how a public register might affect firm culture. Insolvency Practitioners also expressed some concern that the proposals for a register of sanctions might have unintended consequences and that, in particular, sharing low-level sanctions might give a disproportionately negative view of their professionalism.

Respondents also split in their views on the proposals concerning the delegation of functions. Some trade bodies and individual Insolvency Practitioners supported the devolution of some functions (including routine monitoring and authorisation, the provision of education and training and the investigation of complaints) while others, including debt advice providers and creditor organisations, opposed this, arguing that such functions should remain with the new single regulator.

There were a number of concerns about the proposed fee structure, particularly the potential for an increase in fees to appeal regulatory decisions. In the light of these comments, the government will not be increasing fees at this time and is considering alternatives for funding the cost of future activity. The detailed responses received will help shape any future model for a single regulator of Insolvency Practitioners should this be deemed necessary in the future.

Leave a Comment

Your email address will not be published. Required fields are marked *