Credit Management September 2019

INSOLVENCY
Regulatory review
The call for evidence on insolvency practitioner
regulation.
AUTHOR – Michelle Thorp
Michelle Thorp
YOU may be aware of the
Insolvency Service’s (IS)
July publication of its call
for evidence relating to
the present insolvency
regulatory landscape and
regulation of insolvency practitioners
(IPs).
In 2015, the Department for Business,
Energy and Industrial Strategy (BEIS),
of which the Insolvency Service is an
executive agency, introduced legislation
that paved the way for the consultation
in question. The legislation introduced
regulatory objectives (ROs) for the UK’s
insolvency Recognised Professional
Bodies (RPBs), plus the IS as the oversight
regulator of the RPBs. Of the four RPBs
that will be authorising IPs at the end
of 2019, one specialises in Scotland
and another in Northern Ireland (the
latter also regulates IPs in the Republic
of Ireland). The majority of IPs in the
UK are authorised by one of the two
remaining RPBs, of which the Insolvency
Practitioners Association (IPA) is one.
The IPA is the sole RPB dedicated to the
complex field of insolvency.
It is against the background of the
2015 legislation that the call for evidence
will help the government to assess how
well regulation is performing. The other
significant aspect of the call for evidence
is the government’s consideration of
whether to establish a single insolvency
regulator in the UK, which it has the power
to do by October 2022. It has been made
clear that at this stage, the government is
neutral in its approach to the matter and is
keen to hear and consider the views of all
interested parties before any progression.
The provision for the consideration of a
single regulator does not give the IS the
power to potentially become the regulator.
WAYS OF WORKING
At the IPA, we’re always open to new
ideas on strengthening regulation,
as well as sharing these ideas with
our contemporaries for the benefit of
the industry. The world around us is
constantly changing, so it’s vital that
regulation keeps pace and continues to
foster an insolvency industry that serves
stakeholders in the best possible way,
whether that’s from the point of view
of creditors, people in debt, businesses
or government. When considering the
regulatory landscape, we think it is
important to recognise the strengths of the
present framework, the result of decades
of scrutiny and development, so that they
can be maintained and built upon.
The competition that we have between
regulators ensures that fees are kept stable
and that regulation is continually under
review and strengthened where needed,
for the benefit of all stakeholders.
Additionally, the commercial funding
model with which we operate enables
solutions to be implemented quickly
as our dynamic industry changes.
Earlier this year, I wrote in Credit
Management about the IPA’s bespoke
new regulatory framework tailored to
volume providers (VPs) of Individual
Voluntary Arrangements (IVAs), a
statutory insolvency procedure available
in England, Wales and Northern Ireland,
which forms the majority of personal
insolvencies. ‘Volume’ is defined as
controlling more than two percent of the
total market, which at the start of the
year was just over 5,000 cases. In reality,
some firms hold considerably more
cases. Change was required in this area
of insolvency to ensure that regulation
matched the processes employed by
these firms and that all parties involved
in the IVA were treated fairly. The new
regime is the first example of continuous
monitoring in the insolvency industry.
We were able to implement this regime
and effect change so quickly due to the
specialised knowledge available to us at
the IPA as the regulator of the majority of
the IVA market. The other RPBs also have
their specialisms, which in turn allows
for targeted, agile and efficient regulation
across the industry, helping to ensure
that insolvencies are conducted to the
high standards we set for the benefit of
creditors and other stakeholders and that,
where possible, creditors are reimbursed
as they should be.
In response to the IS’s consultation, the
IPA set up a working group comprising
members across our Secretariat, Board
and the IPA’s Standards, Ethics and
Regulatory Liaison Committee to carefully
consider all issues, formulate our position
on the matter and provide our answers to
the call for evidence. We’re also setting
up regional breakfast meetings with IPA
members so that we can understand their
views.
This is an important time for insolvency
regulation and its stakeholders. I welcome
the opportunity to review the regulatory
framework against our ROs and assist
the government on its single regulator
consideration.
The full call for evidence document can
be downloaded from gov.uk. The CICM
will be submitting a response to the call
for evidence. For more information visit:
cicm.com/current-consultation-papers
Michelle Thorp is CEO, Insolvency
Practitioners Association.
The Recognised Standard / www.cicm.com / September 2019 / PAGE 12