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