Consumer affairs minister Jo Swinson writes for Accountancy Age on the incoming reforms to insolvency practitioners’ regulation.
AN EFFECTIVE insolvency regime contributes to economic growth by helping to rescue struggling businesses and ensuring fair treatment for both debtors and creditors.
Encouraging business confidence is a key government policy and the insolvency industry has a huge contribution to make.
The UK has become one of the key jurisdictions in the world of business rescue, consistently placed in the World Bank’s top ten ranking countries for our efficiency in resolving insolvencies.
The strength of our insolvency regime is good for UK business and the government is always looking for ways to improve the system. I am keen to simplify insolvency processes, and have been working with regulators to improve accessibility for those who have complaints against insolvency practitioners (IPs). It is encouraging to see how the insolvency profession shares those goals, and I believe these actions will further enhance confidence in our insolvency regime.
From 5 June, most stakeholders who want to complain against IPs will be able to do so through one single route – the Complaints Gateway – hosted by the Insolvency Service. This will not only ensure that every case gets the attention it deserves, but also that complaints are handled in a consistent way.
Providing an easy to use complaints system is important for consumers – especially when they are going through a bankruptcy or have suffered from a company’s failure, and believe an insolvency practitioner has not acted correctly.
The Complaints Gateway will help consumers to obtain easier access to a resolution of their problems, for example when faced with poor communication by the practitioner or concerns about their independence.
The new Gateway is not a reflection on the integrity of insolvency practitioners who work in what can be very difficult circumstances, but rather a recognition that people should be confident they are receiving the highest service standards across the industry.
The insolvency regulators have worked together to develop common sanctions against IPs for whom complaints are upheld, and to have common decision makers. Consistency of approach should ensure no consumer is left feeling that the consequences of their complaint would have been different if another regulator was involved. This will increase confidence in the insolvency system.
We are also cutting out unnecessary processes as part of the government’s Red Tape Challenge. We have listened to the ideas put forward by business and practitioners to cut out red tape where we can.
The proposed changes will save the industry around £30m a year by reducing the cost of administering insolvencies, but without removing necessary protections. This will benefit all creditors, and lead to more money going to creditors.
We will reduce the numbers of meetings that have to be held, driving down costs during insolvency procedures. We propose removing the requirement to send individual letters to creditors, and instead encourage use of electronic communications.
Bankruptcy trustees and liquidators in court winding-ups will also no longer have to apply to creditor committees before applying legal sanctions to bring parity with powers in administrations.
We are doing well, but we can do better, and these changes are a good step in the right direction.
Jo Swinson (pictured) is consumer affairs minister