Insolvency ethics to be updated by regulators
Ethical guidelines for insolvency practitioners to be updated with the Insolvency Code of Ethics
Transparency call: Brendan Guilfoyle
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.