- Abandonment of New Watchdog Plans
- Insolvency Firms to Face Formal Regulation
- Reforms Aim to Address Regulatory Void in the Sector
Ministers abandoned 2021 plans to create a new Insolvency Service oversight to replace the current four regulatory agencies.
Reforms to regulate insolvency firms will be announced next week, but they will not create a new agency.
The Insolvency Service, which is part of the Department for Business and Trade, will announce proposals that will allow both companies and individuals to be punished for misconduct.
This weekend, sources indicated that a statement could be released as early as Monday.
Nearly two years after a consultation was introduced to pave the way for the establishment of a new independent regulator within the Insolvency Service, Whitehall will make its announcement.
That occurred in the wake of prominent corporate collapses such as those of Bhs and Carillion, which drew attention to the conduct of company directors and auditors.
The goal of the proposed reforms is to close a regulatory void and bring insolvency firms in alignment with the regulations governing providers of audit and legal services, according to an industry executive who has been informed of the proposals.
A quartet of Recognised Professional Bodies, including its Practitioners Association and the Institute of Chartered Accountants in England and Wales (ICAEW), have governed insolvency service providers for decades.
The Insolvency Service awarded the ICAEW its first formal censure in June for failing to monitor a restricted professional.
A practitioner of the industry expressed astonishment that ministers had decided against implementing a new regulator.
According to one source, this could be an option in the future, but it would require legislative time.
Saturday it was unclear what the scope of the new rules regulating businesses would be. But a source indicated that the current quartet of RPBs would be responsible for implementing them.
In 2021, the government promised a public registration of insolvency practitioners and “a system of compensation and redress.”
Changes to Insolvency Practitioners’ bonding to cover fraud or dishonesty losses.
It was unknown whether these reforms would be included in the bundle that will be announced the following week.
