Consultation - Handling of funds in insolvency appointments
The Joint Insolvency Committee has issued a consultation on the handling of funds by insolvency practitioners. David Menzies looks at what is being proposed.
The Joint Insolvency Committee (JIC) is consulting on a revised version of Statement of Insolvency Practice 11 – The Handling of Funds in Formal Insolvency Appointments.
The draft SIP has been developed by a JIC working group comprising members of the profession from firms of different sizes with views obtained from creditor representatives.
The current SIP 11 was issued in 2007 and is not thought to adequately or fully reflect current practice structures and the banking products used by insolvency practitioners or the practices in which they work.
The main change is to provide greater clarity around the need for proportionate safeguards and financial controls so that creditors, and other stakeholders, can be confident that funds are held appropriately and securely and that their interests are adequately protected.
In revising SIP 11 the working group took the following approach:
- adopting the principles and key compliance standards format used for all new SIPs;
- futureproofing the SIP by not referring to specific products or media, as these are subject to continual development, rather the characteristics that an estate account should possess are described;
- providing a robust and flexible framework in which the need for proportionality is recognised;
- requiring practitioners to review and document the adequacy of their internal funds handling arrangements.
It is intended that the revised SIP will apply UK wide.
The consultation closes on 12 September 2017.