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22 Dec 2011
THE LARGEST REGULATOR of insolvency practitioners ICAEW has hit-back at government plans to create a single insolvency regulator.
Earlier this week Ed Davey, minister of insolvency, announced that he wanted to bring in a range of more creditor friendly and transparency boosting initiatives. These included reducing the current nine regulators of insolvency practitioners down to just one.
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However, the ICAEW has said while it supports the need for greater transparency and the need to improve standards they do not support the creation of a single regulator.
Vernon Soare, ICAEW executive director of professional standards, said: "ICAEW understands the need to continually improve standards and is supportive of any measures that will help to enhance transparency and confidence in insolvency procedures. However, we believe that this is best achieved by effective oversight of the existing regulators.
"In the current climate, we don't believe the time and cost associated with establishing a new single regulator is feasible. We will therefore continue to work together to achieve the Government's aims without such radical change."
Currently there are seven professional bodies including ICAEW, ACCA and ICAS that regulate and licence practitioners. However, the Insolvency Service sits above all the licensing bodies and regulates the professional bodies and licenses practitioners.
Davey also announced he will remove the Insolvency Service's role as licensor, so it could concentrate purely on regulation, as soon as practicable.
ICAS director of insolvency Ann Condick also welcomed the move to increase transparency and highlighted currently regulators do not take complaints on fee charges by practitioners - something ICAS is hope to change in its procedures.
Earlier this year it was announced that a parliamentary committee will review the role of the Insolvency Service and other measures such as the introductiono of an insolvency ombudsman.
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Insolvency Service's role
The main problem is that people outside of the insolvency profession do not trust the profession. The profession has lost its way, fulfilling needs that existed 20 years ago, focussing far too much on legislative compliance and too little on communication and engagement with those criticising it and doing the right sort of work - that is providing solutions rather than mere advice. One of the reasons this has happened is because the governing bodies focus far more on compliance than they should do on engagement with those criticising IPs - particularly on the issue of what the criticisers think IPs should be doing. The other reason for the current situation is the legislation is unnecessarily complex - and the main culprit for this is the Insolvency Service, who have failed to take a helicopter view of the legislation, tied up IPs in unnecessary detail virtually unworkable rules as to how they should do their work. It's no different from what happened with the banks where the FSA lacked any real will to do anything other than look at the detail. I am not the only one who finds The Insolvency Service's approach to legislation disgraceful - they tell IPs they should be doing something as it's good practice, so they include a huge amount of detail in what the IPs should do (which costs creditors), then they exclude themselves from the legislation - my question is why is it not good practice for the Insolvency Service when it is for IPs?
I fear for the future. No one, not the Insolvency Service, not the Regulators are focussing on the things they should be. We may have better legislation and oversight than many foreign countries as regards insolvency, but it's still a shambles and I don't see that anything is going to happen to change it.
Posted by: Paul Brindley, 22 Dec 2011 | 12:17