A superabundance of insolvency regulators? - views from the outside world which make uncomfortable reading - breaking the taboo
- Association of Certified Chartered Accountants - ACCA
- Institute of Chartered Accountants in England and Wales - ICAEW
- Institute of Chartered Accountants in Ireland – CARB (ICAI)
- Institute of Chartered Accountants in Scotland - ICAS
- Insolvency Practitioners Association – IPA
- Solicitors Regulation Authority - SRA (Law Society)
- Law Society of Scotland – LSS
- Insolvency Practitioner Unit of the Insolvency Service
"The bad news for millions is a boon for corporate undertakers, also known as insolvency practitioners, who are poorly regulated, lack effective public accountability and indulge in predatory practices.... all UK personal and business insolvencies must be handled by just 1,600 insolvency practitioners belonging to law and accountancy trade associations. They are regulated by no fewer than seven [sic] self-interested groups rather than by any independent regulator, leaving plenty of scope for duplication, waste and buck-passing...The insolvency industry is out of control. It lacks independent regulation, independent complaints investigation procedures and an independent ombudsman to adjudicate on disputes between practitioners and other stakeholders. The practitioners owe a duty of care to all stakeholders and must be forced to make public all relevant information in their possession. One hopes that with the deepening economic gloom parliamentary committees will examine the role of this industry in the loss of jobs, homes and savings."
"It would seem better if the Government, as they'll probably have to, determined that Insolvency Practices should be independent and suggested a single Regulator. The Solicitors Regulation Authority might be a model for such an entity."
"But it seems to me that it is so cosy with those who hold the power to do anything that nothing is going to change. It's an 'old boy's club', each party enriching themselves and the others at the expense of those (the rest of us) who are on the outside."
"In many ways it is very corrupt. It is certainly not very edifying to see. However, unless there is a revolution, I can't see anything changing. Alas."
"The primary stakeholders in the system are the creditors, the debtor (corporate or individual) and the public interest. The needs of this group are merely served by such entities as the Insolvency Service, the ever-increasing body of practitioners (licensed or otherwise) and the vast army of those who feed off the system. The unacceptable consequence is that rights of the primary stakeholders are all to often sacrificed to the interests of those whose duty it is to serve the real beneficiaries. This fundamental principle needs to be reinvigorated...With its confusing array of regulatory and other similar bodies the insolvency industry should be urgently persuaded to consider such a voluntary approach to complaints handling before Parliament is compelled to intervene.The proliferation of professional or quasi-professional insolvency bodies each with its own fiefdom is clearly a matter of growing public concern. This is a problem faced from time to time by most other expanding professions but can be acute if there are an appreciable manner of unqualified operators on the margins. This was also a major concern of Cork. Anecdotal and other evidence strongly suggest that today the problem may be, if anything, far more serious due to the activities of those who prey on the over-indebted consumer."
"The Secretary of State has no plans to bring forward proposals to provide for a single insolvency regulator. The Insolvency Regulation Working Party considered this matter and in their report, published in 1999, emphasised that insolvency practice had never been the prerogative of any one profession. The Working Party also considered that the operational role allocated to the professional bodies in the regulation of insolvency practitioners had bought significant value in creating a regulatory infrastructure and in extending the scope of regulation."
"In the 1980s, before the Insolvency Act 1986, insolvency was an unregulated profession. Anybody could become a trustee or liquidator. There were abuses by a minority, often people with no qualifications. In the 1990s, the situation has changed. We have an Act that means that practitioners may be authorised by recognised professional bodies. Those bodies are recognised by the Secretary of State, and they include the principal accountancy bodies such as the Insolvency Practitioners Association and the Law Societies of England, of Wales and of Scotland.
Recognition is on the basis that those bodies have rules to ensure that practitioners have appropriate educational qualifications and experience, and also that they remain fit and proper. The bodies are responsible for the regulation of the practitioners they authorise. The Secretary of State has a residual licensing function, and about 1,830 practitioners are currently authorised.
The regulatory process has developed considerably since its introduction 10 years ago...but there is no room for complacency. The professional bodies are well aware that the insolvency profession is the subject of continued scrutiny, and my Department will maintain the pressure for the highest standards both within the professional bodies and among the practitioners they regulate.
It is my view that, if self-regulation works, can be seen to work and works in the public interest, it is fine. Clearly, there are other ways of doing things. In the United States of America and in Canada, for example, the Government play a more direct and greater role in the regulation of insolvency practice, but such systems have their flaws. At the same time, self-regulation is a privilege, and if it is to continue it must be earned."