Insolvency report offers a clearer view of the profession

The Insolvency Service has offered its first insight into the work of
business recovery experts, insolvency practitioners and their professional bodies.

Looking at last year the regulator found that a quarter of all registered IPs strangely had no insolvency work; there were a high number of complaints against IPs; and that there needs to be a separation between the regulation of IPs and authorising their licences.

The report is based upon a study of the profession from January 2008 to the beginning of this year, compiled in a bid to make the profession more transparent amid criticism from observers that it was opaque.

Complaints made against IPs were high with 78% of Insolvency Practitioners Association members facing objections, 73% of ACCA practitioners saw complaints made against them; 59% of ICAEW members, and 51% of those from ICAS.

Other statistics reveal that few licenses to practice were revoked. The IPA withdrew two, ICAEW took back one, and one licence was refused by ACCA on the grounds the individual concerned did not have enough experience.

Among the professional bodies just the ACCA, IPA and ICAEW reprimanded practitioners following monitoring visits from the Insolvency Service.

The IPA sanctioned 12% of their practitioner’s following a visit from the regulator. This included two IP licences revoked because the individuals were not fit and proper. One IP was limited to the number of appointments he could take with the limit to stay in place until he showed improvements in his practice.

Other sanctions following complaints included ICAS severely reprimanding an IP over misconduct. He was said to have failed in his responsibilities and was forced to pay a penalty of £35,000 as well as costs of £40,000. He was reprimanded over accusations that he entered into improper financial agreements, after taking referrals from a firm of debt counsellors.

Statistics from the study show that during the course of the year 25% of IPs actually took no insolvency appointments ­ despite growing numbers of company and personal insolvencies.

A spokesman for the Insolvency Service says the government body, established in 1986, is trying to encourage greater transparency in the profession through procedures such as SIP 16, which requires insolvency practitioners to explain to creditors what they have done when arranging a pre-pack administration, it seemed the right time for the IS to practice what it preaches.

Adding: ‘We are trying to be as transparent as possible in this review.’

David Kerr, chief executive at the IPA, says the transparency brought by the review, ‘helps build confidence in what the regulator is doing.’

He adds: ‘Hopefully it will increase confidence in the system.’