By Daniel Hunter
A single gateway for complaints against insolvency practitioners (IPs) which makes the process easier and more transparent was announced today (Wednesday) by Business Minister Jo Swinson.
As part of the Insolvency Service commitment to the Red Tape Challenge, the Minister also announced a cut in red tape for businesses, by reducing for example the numbers of meetings that have to be held during insolvency procedures which can drive up costs.
These savings can then be passed onto creditors in an insolvency process. The measures are expected to save over £30m per year and will require legislation.
From today (5 June 2013), nearly all practitioner complaints will come though a common Complaints Gateway hosted by the Insolvency Service in Leeds, creating a more accessible route for those with a grievance. Previously, complainants would have needed to work out which of the eight relevant authorising bodies to complain to.
“An easy route to complain is important for consumers — especially when they are going through a bankruptcy or have suffered from a company’s failure and they think an insolvency practitioner has not acted correctly," Business Minister Jo Swinson said.
“This new Complaints Gateway will help consumers dealing with the insolvency industry to get speedier resolution of problems and easier access to the right information. Such problems might, for example, be poor communication by the practitioner or worries about their independence.
“I am pleased that the insolvency profession shares our desire to improve the public’s perception and confidence in the insolvency regime.
“We are also cutting out needless processes. We have listened to the ideas put forward by business and practitioners to cut out unnecessary red tape. These changes will make sure the cost of administering insolvencies will be reduced with savings being passed on to creditors, without removing necessary protections.”
The Minister also announced that insolvency industry regulators have worked together to develop common sanctions against insolvency practitioners against whom complaints are upheld and towards greater consistency in reviews and appeal decisions.
In a joint statement, representatives from the participating regulatory bodies said: "The Complaints Gateway is an example of what can be achieved by the regulators and Government working together. This is part of a concerted effort by the profession to enhance public confidence in insolvency regulation, and it will provide a unique opportunity to learn from the data collected by the gateway and inform our approach to regulation accordingly."
These measures, brought in by the Insolvency Service, are expected to introduce enhanced transparency and consistency in insolvency procedures, leading to improved outcomes for business and consumers. They follow extensive negotiations with the regulators and the insolvency profession aimed at making the regulation of the industry more consistent, independent and accessible for complainants.
Speaking about the measure to reduce red tape, Chief Executive of the Institute for Credit Management, Philip King, said: "We believe that making insolvency processes more efficient and harnessing new technology to streamline the process still further will ultimately enhance the creditors' position, reduce the overall cost of administrations, and further improve the relationship between creditors and IPs. The Red Tape Challenge has provided an opportunity to bring together the views of various stakeholders and has helped the drive for change in the way creditors look at insolvency."
Changes as a result of the Red Tape Challenge include:
- Increasing the flexibility as to how creditors engage in the decision making process, and removing the requirement for IPs to hold meetings with creditors where they are not necessary.
- Enabling IPs to make greater use of electronic communications, for example making it easier to place notices on websites instead of sending individual letters to creditors.
- Allowing creditors to opt out of receiving further communications where they no longer have an interest in the insolvency.
- Streamlining the process by which IPs report misconduct by directors of insolvent companies to the Secretary of State, enabling investigations to be commenced earlier.
- Removing the requirements on IPs to record time spent on cases, where their fees have not been fixed on a time cost basis, and to maintain a separate record of certain case events.
- Removing the requirement for trustees in bankruptcy and liquidators in court winding-ups to apply to creditor committees before undertaking certain functions, to achieve consistency with powers in administrations.
Jo Swinson also announced the publication of the Insolvency Service’s Annual Review of Regulation for 2012. The review includes details of the agency’s monitoring activities as oversight regulator as well as the outcomes from disciplinary action by regulators during 2012.
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