Ethical guidelines for insolvency practitioners are to be updated in a bid to highlight conflicted interests on transparency and confidentiality.

The Insolvency Code of Ethics has received backing from all the regulators and replaces the Insolvency Ethical Guide which came into force in January 2004.

Accountants have a similar guideline set out by the Consultative Committee of Accountancy Bodies but are obliged to keep information about companies private. IPs dealing with troubled businesses must be as transparent as possible in order to appease creditors, however.

The Insolvency Service has endorsed the changes and finds new guidelines provide a clearer account of how staff should act when dealing with contradictory issues.

A spokesman for the IS said: ‘The code covers the period before taking an appointment as well as when carrying out the role of insolvency office-holder.’

The current guide provides insolvency practitioners with five principles to adhere to, including a list of common situations they may come across. The revised code will continue to incorporate the principles but has been modified to provide more details regarding the threats practitioners may face.

The code also updates on the two main types of threat, self-interest and self-review, with the revised version adding advocacy, familiarity and intimidation, as well as information on potential safeguards.

Brendan Guilfoyle, chairman of the ethics committee at the Insolvency Practitioners Association, believes that IPs should not hide behind confidentiality because in many cases their clients are the creditors. ‘We would not expect our members to hide behind the fundamental principle of confidentiality but to be transparent when dealing with insolvency appointments’ he said.

The Insolvency Practitioners Association is also hoping to attach a foreword to the code, in conjunction with the Insolvency Service, in order to emphasise the importance on how to tackle these issues.

The Joint Insolvency Committee ended consultation in July last year and expects to publish the code on 1 November.