Corporate insolvency market faces fair trade probe
OFT to report on the structure of the insolvency market next year
The Office of Fair Trading has revealed that it is conducting an in-depth
study of the corporate insolvency market.
The investigation will look at the structure of the market and the
appointment process for insolvency practitioners. It will also search for
features in the market which may result in inequalities, such as higher fees or
lower recovery rates for certain groups of creditors.
It follows recent concerns raised by the government and Insolvency Service
over the way insolvency practitioners are appointed.
The study will collect and analyse data from accountancy firms, law
practices, government, regulators and trade bodies, with the OFT planning to
release its findings at the end of 2010, unless it is necessary to conduct a
second stage.
Clive Maxwell, OFT senior director of services, said: “We want to identify
any potential problems within the corporate insolvency market to ensure that
firms and practitioners are competing freely and that the market is working well
for the end consumers. Efficient insolvency services are an important component
of a modern market economy.”
Listed accountancy company Tenon welcomed the announcement, stating that it
supported “our long held belief that a competitive and transparent market within
the insolvency industry is in the best interests of all stakeholders, including
practitioners, creditors and the public”.
The Forum of Private Business argued that the probe must deal with “phoenix”
companies starting over again. It said that smaller creditors suffer when
companies start up again under a different name.