Watchdog gets a stronger bite

Insolvency practitioners who fail to adhere to the entrepreneurial spirit espoused by trade secretary Stephen Byers will be ‘named and shamed’ by the new Insolvency Practices Council.

The council is key to a raft of reforms to current regulation governing the conduct of individuals and firms involved in insolvency, as revealed in Accountancy Age.

Chris Garwood, partner of Carrick Read and chairman of the report’s working party, said regulatory reform was needed because the profession was too reactive in questioning its own actions and whether its procedures could be conducted more efficiently.

‘It is the problem of being an insider,’ he said. ‘If you are a regulator, you think you are making the world a better place – unless there is a crisis – rather than thinking there is a better way to achieve the end goal.’

He added that the new independent body would have the potential to ask questions and then produce regular updates on the profession.

The report, due to be published yesterday, has now been delivered to Byers and trade minister Kim Howells. Garwood expects them to indicate that the recognised professional bodies should get together to implement the recommendations.

The proposed council is only a part of a wider insolvency overhaul, which will include a review of the law as soon as this summer.

The aim is to make it easier for smaller companies to continue trading, rather than go into liquidation, by following a more US-style approach.

This allows companies breathing space, in which creditors will be forced to suspend action while the company comes up with a business plan.

Partner at Geoffrey Martin and past president of the Society of Practitioners of Insolvency, Brendan Guilfoyle, said: ‘Allowing them a moratorium has to be a good thing but there needs to be safeguards and controls to restrict any flouting of the regulations.’

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