Government gives positive review of insolvency regulation

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david-menzies By David Menzies, Director of Insolvency

11 April 2016

The Insolvency Service annual review of insolvency practitioner regulation in 2015 gives an indication of a strong regulatory framework which underpins confidence in the work of IPs.

The Insolvency Service’s Annual review of insolvency practitioner regulation for 2015 has highlighted a strong regulatory framework within which the UK insolvency profession operates although also indicates that there is more that can be done to provide even greater confidence to stakeholders in the work that insolvency practitioners do.

The year in review

The report highlights the productive and co-operative manner in which RPBs and the Insolvency Service as oversight regulator work together in implementing legislative change.

During 2015 regulatory objectives and partial authorisation were brought into legislation in October 2015. In addition, changes to professional standards in relation to ethics, office holder remuneration and pre-pack administrations were also made with a view to strengthening both trust and transparency in the work of insolvency practitioners.

Prior to transferring responsibility for SIP 16 (pre-pack administration sales) monitoring to the Recognised Professional Bodies (RPBs) in November 2015, just under 96% of SIP 16 statements reviewed by the Insolvency Service were considered to be compliant or with minor breaches.

High confidence in ICAS and ICAS IPs

The report also contains some strong messages in relation to ICAS and the IPs who are authorised by ICAS.

During the year under review, ICAS received an oversight monitoring visit from the Insolvency Service which noted that ICAS had strong controls in place across all areas and processes of insolvency regulation. In addition, ICAS was one of only 3 RPBs who were not investigated in relation to complaints against them.

ICAS also had the biggest percentage increase in the number of IPs who they authorise, one of only 3 RPBs to show an increase.

The report also indicates that ICAS IPs are working to an extremely high professional standard with nearly 90% of monitoring visits concluded during 2015 resulting in a satisfactory outcome.

Complaints received by the Insolvency Service gateway in relation to the conduct of IPs declined pro-rata slightly on 2014 to just under 900 complaints across the UK. Although there are no statistics on the actual number of insolvency cases which remain live in any year the percentage of complaints compared to the likely number of cases remains extremely low.

Almost one third of the complaints related to professional standards in IVAs and trust deeds with ethics and communication breakdown or failure each accounting for around one quarter of complaints received.

Overall only 2% of complaints referred for investigation related to ICAS regulated IPs which compares well against the 6% of appointment taking IPs that ICAS regulate.

It is encouraging to note that of all complaints made to the gateway 4% were made by IPs in relation to other IPs indicating a strong desire for the upholding of professional standards within the profession.

Looking ahead

The report also provides some insight into the challenges and areas in which the insolvency profession will come under scrutiny.

The power in legislation to create a single regulator by October 2022 will increase the focus of the Insolvency Service activity to evaluate the effectiveness of the current regulatory system.  The Insolvency Service have indicated that they will focus more on themed reviews across the RPBs over the next two years rather than individual monitoring visits. This will allow more of an overarching view of the regulatory landscape than the previous individual RPB performance monitoring with the aim of improving consistency across RPBs.

The Insolvency Service have also indicated that a review of the statutory bonding regime will also be undertaken and it is expected that a public consultation on this may be issued during the Summer of 2016 along with discussions about any regulatory changes that can be made.

For the profession, there are indications within the report that focus will continue to be on the effectiveness of recent changes to fees (E&W) and the pre-pack administration regime both aimed at increased transparency in the profession’s work.


  • Insolvency

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