The proposals include creating a single regulator for insolvency practitioners and extending regulation to companies that offer insolvency services.
Currently, the country’s 1,500 or so insolvency practitioners are regulated as individuals – an arrangement that the government believes “has not kept pace with changes in the way the insolvency market operates”. Many firms employing insolvency practitioners and offering insolvency services are not governed by qualified insolvency practitioners, but the firms themselves are not covered by regulation, at present.
The proposed new regulator would be part of the Insolvency Service and would replace the role of the four recognised professional bodies that currently cover insolvency practitioners: (largest to smallest by number of members)
The government views the current regime of regulation as “disproportionately complex” considering the relatively small number of qualified insolvency practitioners.
Under the changes, individuals and companies offering insolvency services would be subject to an annual assessment to demonstrate they meet the minimum requirements for registration.
Other key changes included in the consultation are the creation of a public register of all firms and individuals that offer insolvency services and the creation of a system of compensation and redress in the event of insolvency cases being mishandled.
Opening the consultation, Business Minister Lord Callanan said: “Those most impacted by insolvency need confidence in the professionals involved, and the UK regime has a strong reputation for delivering the best outcomes possible when an insolvency occurs. In order to maintain that confidence, the regulatory regime must keep pace with the times and these proposals to introduce an independent regulator will strengthen the regime and deliver greater transparency, accountability and protection for creditors, investors and consumers.”
The consultation – which runs until 25th March 2022 – invites views from within the insolvency industry (from insolvency practitioners, professional and trade bodies, and related professionals such as lawyers, etc.), but also from any other interest parties (including debt charities, business representative organisations and members of the public).
The proposals are based on the results of a 2019 Call for Evidence and would apply to England, Scotland and Wales.
The suggestion from the Insolvency Service’s 5-year strategy, published in September 2021, is that implementation wouldn’t start until 2024.
When you suspect fraud or believe that a company director or third party is not being honest, we understand how difficult and time-consuming the investigations process can be. Our investigative services are designed to provide you with the whole picture allowing you to concentrate on the more technical insolvency issues. From intelligence gathering and tracing, to on-site support including digital data capture and forensics, ESA Risk has the investigations side of your insolvency case covered.
If you have a limited company that you wish to close, we can introduce you to an insolvency practitioner, who will ensure the correct legal process is followed.
If you suspect that a fraud has occurred within your business and need advice or support on the next steps, we’re here to help.