Insolvency Technical Update - April 2016
A round-up of recent developments in insolvency.
SIP 2 and SIP 4
ICAS, together with other RPBs, have issued a revised SIP 2 - Investigations by office holders in administrations and insolvent liquidations and the submission of conduct reports by office holders. The revised SIP is effective from 6 April 2016.
As a result of SIP 2 being issued, SIP 4 shall only be applicable in respect of cases commenced before 6 April 2016. SIP 4 shall be withdrawn automatically on 6 October 2016.
Further information is available on ICAS.com.
Director Conduct Reporting
Changes to director conduct reporting came into effect on 6 April 2016. Director conduct reports require to be submitted within 3 months of the relevant insolvency date (reduced from 6 months) and must be submitted via the Insolvency Service portal (see below) where the case is under England & Wales or Scottish legislation. Where the case is under Northern Ireland legislation there is a new form (DCR) to be completed and emailed to the Insolvency Service, DETI.
Further information is available:
Accessing the director conduct reporting portal
The new director conduct reporting portal for England and Wales and Scotland is hosted on GOV.UK. Access the service and guidance.
IPs are not being issued with user names and passwords to allow them to register to use the Service.
The registration process will require IPs to:
- Ensure that their email address on the Insolvency Service Database is correct and also unique and personal to them (see below)
- Visit the start page
- Follow the link on the start page which will require them to enter their IP number and email address.
- A temporary password will then be sent to their email address and this will need to be changed when they next log in.
- The Service includes a dashboard showing the IP’s cases in terms of when they are due for submission and their status. The dashboard will only show cases where the date of appointment is on or after 6 April 2016 and because this data will be uploaded from the notice of appointment which appears in the London or Edinburgh Gazette, cases will not appear on the dashboard until after publication of that notice.
IPs can use the find an Insolvency practitioner tool to check their entry on the database. Any corrections should be notified to CustomerServices.EAS@insolvency.gsi.gov.uk and should include 'IP Database' in the subject field.
Consumer Credit
ICAS introduced new arrangements for consumer credit on 1 April 2016.
The Designated Professional Body (Consumer Credit) Handbook has been approved by the Financial Conduct Authority (FCA). This enables firms to provide consumer credit services without the need for authorisation from the FCA.
Consumer credit activities may be undertaken by your firm if your firm meets the eligibility criteria set out in the DPB (Consumer Credit) Handbook and complies with the Handbook when undertaking those activities.
There’s no application to complete and no fee to pay.
Under Part XX of the Financial Services and Markets Act 2000. This means:
- The service may only be provided in a manner incidental to the activity of the firm generally; and
- Which arises / complementary to, another professional service (which is not itself a regulated activity) provided to a specific consumer client (as with investment business).
ICAS licensed insolvency practitioners are eligible to use the DPB (Consumer Credit) Handbook if the services they provide are incidental. For firms using the DPB (Consumer Credit) Handbook this means that all the insolvency practitioners in the practice must be licensed by ICAS (or ICAEW or CAI).
If your firm is authorised by the FCA, it cannot use these arrangements. Your firm must hold the relevant FCA permissions to undertake credit-related regulated activities.
View the DPB (Consumer Credit) Handbook and other information about consumer credit.
National Living Wage
The National Living Wage (NLW) came into effect on 1 April 2016 and is set at £7.20 per hour. The NLW must be paid to all workers aged 25 or over.
Insolvency (Amendment) Rules 2016
The Insolvency (Amendment) Rules 2016 became effective on 6 April 2016. These amend the Insolvency Rules 1986 to give effect to moving debtor bankruptcy applications in England & Wales to an online process and withdrawing debtor bankruptcy petitions.
Bankruptcy (Scotland) Act 2016
The Scottish Parliament has passed the Bankruptcy (Scotland) Bill, a Bill to consolidate over 30 years of personal bankruptcy legislation into one piece of legislation. ICAS provided evidence during the course of the Bill’s passage through Parliament and the final Bill as passed reflects many of the amendments which ICAS called for to improve the Bill from that originally introduced. The Bankruptcy (Scotland) Act 2016 is expected to become effective on 30 November 2016.
Insolvency (Amendment) Act (Northern Ireland) 2016
Certain provisions within the Act have been commenced with effect from 1 April 2016. This includes a number of technical provisions affecting liquidations, administrations, and bankruptcy.
Provisions introducing statutory objectives for the insolvency regulatory framework, enhanced powers for DETI and provisions to allow partial authorisation of insolvency practitioners have also been commenced.
Further details are available on ICAS.com.
Starting in practice as an insolvency practitioner
A new guide has been published by ICAS (member login required) providing a high level summary of personal, technical and regulatory matters which anyone considering starting in practice as an insolvency practitioner should consider.
Although aimed at those staring out in practice, the guide will also provide a useful reminder to anyone practicing as an insolvency practitioner of the key areas they should be considering to ensure best practice for their firm and that they are compliant in regulatory matters.
Insolvency Committee in review
Find out what the Insolvency Committee has achieved and been involved in as Donald McNaught reflects on his first year as Convenor of the Insolvency Committee.
Joint Insolvency exam changes for 2016
The Joint Insolvency Exam Board have issued details of changes to the 2016 exam sitting of the joint insolvency exam.
SIP 13 consultation
The Joint Insolvency Committee have issued for consultation a draft revised SIP 13 – acquisition of assets by connected parties in an insolvency process.
The proposed SIP requires proportionate disclosure when connected parties acquire assets in both personal and corporate insolvency procedures. The consultation is open until 11 May 2016.
European Insolvency framework consultation
The European Commission are seeking views on to inform their work on a common insolvency framework. This consultation seeks stakeholders' views on key insolvency aspects.
In particular, it seeks views with regard to common principles and standards which could ensure that national insolvency frameworks work well, especially in a cross-border context. he responses will be used to identify which aspects may possibly be dealt with in the legislative initiative and which in other possible complimentary actions in this field.
The consultation is open until 14 June 2016.
Review of Protected Trust Deed legislation changes
The Accountant in Bankruptcy has issued a consultation reviewing the effectiveness of recent changes to protected trust deed legislation.
The consultation is open until 25 April 2016.
PTD Form 4
The Accountant in Bankruptcy has issued a Dear Trustee communication [PDF] relating to the presentation of Other/miscellaneous income on Form 4 used for protected trust deeds.
The Dear Trustee also contains a reminder about completion of statement 2 on Form 4 where there is a variance in the expected dividend.
DAS Digest
The Accountant in Bankruptcy has issued their spring edition of DAS Digest.
This edition features include:
- DAS at the stakeholder events
- DAS completions
- Business DAS one year on
- DASH enhancements
- Messages and updates from the DAS team
Redundancy support debated
David Menzies, Director of Insolvency and Setutsi van Lare, Insolvency Technical Support recently attended the Scottish Government PACE Redundancy Support conference.
David presented a session to the assembled delegates on an IP’s perspective on engagement with PACE.
A round up of the conference is available.
What does adjudication mean in practice?
Recent Court of Session decisions have included comment on the approach administrators may take in adjudicating on creditors claims.
David Sellar QC has assessed the implications of recent Court of Session decisions and how an administrator may approach this in practice in light of judicial comment.
Professional development opportunities from ICAS
A number of courses are being run by ICAS/BPP in the next few months: