So the Insolvency Service has done the decent thing and said it will separate
its practitioner licensing arm from its regulatory division.
This comes after its first annual review of how it regulates the insolvency
profession. The government agency said it will now put its ‘authorisation
function at arm’s length from its overarching regulatory role’. The changes mean
the person who authorised an IP will not be allowed to regulate or investigate
them at a later stage.
Reading between the lines, the move has surely been made to help the
regulator ward off future broadsides from politicians and even the
practitioners themselves.
MPs hammered the department for its monitoring of pre-pack administrations,
warning that the integrity of the service and the IPs under its purview was on
the line.
With the threat of company collapses looming larger than it has since the
early 1990’s, the Insolvency Service can ill afford people taking swipes at its
operating policies.
The body is intending to keep the functions separate as much as it can, but
it did admit the regulatory side would take precedence because of efforts to be
‘as transparent as possible’.
The service authorises about 90 licences a year, a figure they believe will
remain about the same despite the spike in demand for practitioners. As for the
rule change itself, insolvency figures have welcomed it after some practitioners
previously raised issues about potential conflicts of interest.
Peter Burton, head of regulatory policy at ICAEW, said last week: ‘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 said.
David Jetuah is a reporter on Accountancy Age