BusinessBusiness RecoveryInsolvency report offers a clearer view of the profession

Insolvency report offers a clearer view of the profession

Report shows 78% of IPA members faced complaints, while a quarter of all registered IPs had no insolvency work

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.’

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