Insolvency Service's IP authorisation to be kept at 'arms length'

The Insolvency Service will seperate its practitioner licensing arm from its regulatory function, following a review.

The government agency said it will now put its 'authorisation function at arm's length from its overarching regulatory role', following its first annual review of its regulation of the whole profession.

The insolvency industry welcomed the move, after practitioners had previously shown concern about the potential for a conflict of interest.

Peter Burton, head of regulatory policy at ICAEW, said: 'The Insolvency Service is on the road to recognising this is an issue and are taking steps to tackle it.'

'There are a number of people who have been poking them for wearing two hats,' he added.

A spokesman for the Insolvency Service said the changes meant that a person who authorised an IP will not be allowed to regulate or investigate them at a later stage. He added that the body would 'separate the functions as much as possible'.

'Inevitably the regulation will take precedence but we are trying to be as transparent as possible.'

The Insolvency Service currently authorises approximately 90 licences a year and there is nothing at this stage which leads them to believe authorisations will drop below its current level.

However Burton believes 'the Insolvency Service will licence fewer and fewer insolvency practitioners in the future'.

Other details to come out of the report show that over 25% of authorised IPs failed to take appointments in the last year and of those that did just over 7% faced sanctions.

The report also flagged up a complaint made against ICAS for its lack of communication in dealing with a member of the public's query. The person sent a letter of complaint to ICAS in August 2007 and did not hear back until May 2009. Although the Insolvency Service said that each case is unique it advised ICAS to be more transparent in the future adding 'what is the harm in keeping a complainant in the picture'.

Further reading:

Insolvencies skyrocket again