Bomb Shell to End the Year: Huge Shake up of IP regulation ahoy!! "this regime has worked REASONABLY WELL"
Well, what a way to end the working year! BIS have published their response to the recent consultation on the IP profession. Accountancy Age has picked up on the story, with a particular slant to the one regulator element of the mooted reforms. Here is the relevant Minister's (Mr Ed Davey MP's) statement (with bold highlights - see here for a word cloud on Davey's statement):
"I am today responding to the consultation published earlier this year on proposed reforms to the regulation of insolvency practitioners.
The present economic circumstances have increased the profile of insolvency professionals, and focused attention on the effectiveness of the insolvency regulatory regime. Everyone who is affected by insolvency is entitled to have confidence that the insolvency profession will deliver the best possible outcome in difficult and challenging circumstances.
I believe that confidence in the insolvency regulatory regime plays a vital role in ensuring that markets operate fairly and efficiently, by ensuring that in the event of insolvency as much is fairly returned to those extending credit as is possible. The fair and effective recycling of economic value through insolvency procedures is an important driver of economic growth.
It is for these reasons that earlier this year I published a consultation on a set of proposed reforms to the insolvency regulatory regime, following on from the earlier report published by the Office of Fair Trading. I am grateful to all those who responded to the consultation, and who have subsequently contributed to the debate about the nature and scope of possible reform.
The present regulatory regime is a complex one involving a number of different regulators. In addition, the Secretary of State currently plays a role both in the oversight of the various regulators and as a direct regulator of a small number of practitioners.
I am satisfied that this regime has worked reasonably well, and recognise that the vast majority of insolvency practitioners do a good job in difficult circumstances. The Government also recognises the benefits self-regulation provides, including its utilisation of the expertise of the profession.
However, evidence provided by the Office of Fair Trading suggests that unsecured creditors do not always get the returns they might expect. In the light of responses received to the consultation I am persuaded that a great deal more could be done to improve the effectiveness of, and confidence in, the insolvency regulatory regime.
My vision is to have a regulatory regime that is transparent, consistent, accessible, independent and accountable.
Responses to the consultation and subsequent discussions I have held with stakeholders have indicated strong support for an independent single regulator for insolvency practitioners as an effective and efficient way of achieving these aims. I can see the merits of this and we have not ruled out moving to this. However we wish to work with the profession and interested parties to see if there is a way to reform the system so that it delivers better against our objectives without such significant change.
The Government will explore with interested parties how best to strengthen and simplify processes for handling complaints, including on excessive fee charging, and achieving consistent and transparent sanctions.
We intend to bring forward proposals, when legislative time permits, to remove the Secretary of State from the direct authorisation of insolvency practitioners, to ensure that the powers of the Secretary of State as oversight regulator are appropriate, and to ensure that the objectives of the regulatory regime are clear.
We will also be looking, in the light of responses to our consultation, at the charging structure for oversight regulation, to ensure that it apportions the costs fairly between the different regulators.
The Government is grateful for the useful contributions made by the Insolvency Practices Council, but agrees with responses to the consultation which indicate that there is no longer a need for an additional body of this sort and its functions would be better placed elsewhere within the regulatory and policy structure.
We consulted on whether to change secondary legislation to improve the disclosure and transparency of fee charging, to modify court processes on challenges to fees, and allowing unsecured creditors to exercise greater influence over insolvency proceedings. Views were mixed on these, with creditors acknowledging that a balance needed to be struck between providing more power and information and increasing costs. We will consider further all these proposals in light of any new regime for complaints.
Responses to the consultation do not indicate strong support or evidence for making changes to the level of the ‘prescribed part’. Consequently, the Government does not intend to make changes on this at this time.
The Government welcomes the recent moves by the Joint Insolvency Committee to widen its membership and improve the timeliness and efficiency of its work.
I believe that by working with interested parties to address these issues, better outcomes could be achieved for creditors and the effectiveness and confidence in the insolvency regime would be improved. We recognise however that we may need to do more by way of legislation should it appear that these measures are unable to deliver the necessary outcomes."
R3 have responded to the news. They have noted:
“We support today’s announcement by Edward Davey MP, the Minster for Employment Relations, Consumer and Postal Affairs, which recognises that ‘the vast majority of insolvency practitioners do a good job in difficult circumstances’ and that the regime ‘has worked reasonably well’ during testing times.
“Insolvency practitioners inherit a challenging set of circumstances with every job, often restricted by limited time and assets, and the threat of redundancies from the failure of the business. Overall the UK’s insolvency regime is not in need of radical reform.
“The insolvency profession looks forward to working with the Minster to consider an independent single regulator while strengthening and simplifying processes for handling complaints. We recognise the frustrations of unsecured creditors at not receiving the returns they expect and look to greater engagement in the insolvency process. We share the Minister’s aim to ensure the regulatory regime is transparent, consistent, accessible, independent and accountable.”
"BPIR is an excellent series, of interest to both corporate and personal insolvency lawyers,...