The Insolvency Practitioners Association tried to cover itself in glory last week by imposing a record #37,000 fine and six-figure damages on a leading liquidator who broke some of the profession's most basic rules. The liquidator, Ray Hocking, a partner with BDO Stoy Hayward, who reputedly brings in a #1m a year in fees, signed a consent order admitting that he drew remuneration without obtaining appropriate authority and that he took more money than authorised.

In theory, there is nothing wrong with the IPA's actions. Robust regulation shows the public that the profession can put its own house in order. Where the IPA's stab at regulatory muscle-flexing goes awry is in its attempt to sell a fudge as tough action. The consent order, signed following a report by the IPA's investigations committee, is the act of a weak regulator.

It makes the organisation look tough, but scratch away at the surface and justice is rarely done. The accused, if he is not guilty, is tempted to accept a diluted punishment so that he can put the incident behind him. And the public is left confused, dissatisfied and wondering why the punishment was not proportionate to the loss it suffered.

A courageous IPA would have taken Hocking through the disciplinary route, where a tribunal would have settled his fate. The distinction between the disciplinary and investigative route is subtle. With a disciplinary tribunal, if Hocking had been found guilty, he would have lost his licence.

This would have been a more fitting penalty than fining a man of his fee-earning power #37,000. And if he was innocent, he would have walked away with his name untarnished.

The Hocking case has more to do with the IPA trying to cash in at a politically sensitive time. By way of background, it helps to know that a DTI-instigated working party is due any day to publish a consultation paper, reviewing the 1986 Insolvency Act.

Among the key proposals is the question of whether the work of the UK's existing nine insolvency regulators should be sub-contracted to a single body to help clarify responsibility for self-regulation in the public's mind.

The IPA has fought tooth-and-nail to have this included in the report.

It wants to be the sole sub-contractor. The consent order was its bid to win the backing of DTI minister Nigel Griffiths. But he must be unimpressed.

The IPA has highlighted the weakness of self-regulation and strengthened the case for reform.