Complaints against insolvency practitioners rise 25%

by Richard Crump

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27 Aug 2014

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Insolvency Service

ALMOST 1,000 complaints were made against insolvency practitioners in the last 12 months, representing an increase of 25% on the previous year, according to figures from the Insolvency Service.

The Insolvency Service revealed a steep rise in complaints about practitioners since it launched its Insolvency Practitioners' Complaints Gateway in June 2013 as a single point of entry for complaints about insolvency practitioners.

In the first year since its launch, the gateway received 941 complaints, compared with 748 and 578 complaints made to regulators in 2013 and 2012 respectively. Of the 941 complaints, 699 were referred to authorising bodies, 170 were rejected and 72 are currently being processed.

Welcoming the report, Graham Rumney, chief executive of insolvency trade body R3, said: "Initiatives, like the Complaints Gateway, that add transparency and accessibility to the insolvency regulatory process are welcome. The gateway is a significant improvement on the process it replaces and we were pleased to see it introduced.

"It's particularly welcome that there is now hard evidence on the number and nature of complaints; it's encouraging that, out of the tens of thousands of cases handled by insolvency practitioners in the last year, there have been relatively so few complaints made."

Last week, the Insolvency Service confirmed that Deloitte has been involved in more 20 administrations where it failed to correctly make workers redundant, potentially costing taxpayers as much as £50m in in compensatory payments.

It said that government paid out £18.2m in protective awards in relation to Deloitte's administration of Woolworths and that £6.9m has been paid out in relation to a 20 smaller cases.

A further £26m is expected to be paid out in relation to redundancies relating the collapse of electrical retailer Comet, where Deloitte was appointed administrator. In July, business secretary Vince Cable referred three senior Deloitte insolvency practitioners to the ICAEW over reports there was a conflict of interest when they accepted the role of administrators, given that they had previously advised the company. Deloitte has disputed that there is a conflict of interest.

"We do not believe the £26m figure quoted in respect of Comet to be correct. We estimate that the maximum possible protective award that could be applied in this case is less than half this amount," Deloitte said in a statement.

The Big Four firm added that such awards are "common and widespread" because of inherent conflicts between employment legislation and insolvency law, which insolvency trade body R3 lobbied the government over last year.

 

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