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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

21 DEC 2012

Kempson Review on IPs fees announced: no longer a taboo!

Being no stranger to the thorny issues of IPs fees (see: Tribe, John and Hunt, Stephen (2010) The remuneration taboo: Yearwood-Grazette and Freeburn. Insolvency Intelligence, 23(9), pp. 139-142 & Mulligan, Michael and Tribe, John (2003) The remuneration of office holders in corporate insolvency - liquidators, administrators and administrative receivers: part 1. Insolvency Lawyer(3), pp. 101-117) it is with great interest that one notes the launch of the Kempson Review into IPs fees. Here is the Insolvency Press Release:

"Business Minister Jo Swinson today announced a review that will ensure creditors achieve value for money from procedures carried out by insolvency practitioners.

The review, which will be led by Professor Elaine Kempson from the University of Bristol, will hear views from members of the insolvency profession as well as debtors and creditors. A report is expected in summer 2013.

The review will build on an earlier study conducted by the Office of Fair Trading which responded to concerns expressed by creditors that fees charged by insolvency practitioners do not represent value for money.

Insolvency practitioners are entitled to be paid for the work they do, but it is vital to ensure that creditors are being charged fairly to increase confidence in the insolvency regime.

Jo Swinson said:

“The issue of insolvency practitioner fees remains a key concern for creditors and debtors, and I’m pleased to announce the appointment of Professor Kempson to look at this issue. Insolvency is a difficult process for all concerned, but especially so for those unfamiliar with how the system works. Creditors want to see a system that returns as much money to them as quickly as possible.”

Professor Kempson said:

“I am delighted to have been asked to lead this review and look forward to hearing the views of the different parties involved in an insolvency. This is an important part of the insolvency landscape and it is vital that all who are involved have confidence in how the system works."

Jo Swinson also announced a radical reform to the way complaints against insolvency practitioners are handled by industry regulators. The changes follow extensive negotiations with the regulators and the insolvency profession aimed at reforming the system so that it is more consistent, independent and accessible for complainants.

The main elements of the reforms are:-


v A complaints gateway operated by the Insolvency Service providing visibility to the complaints system for creditors, debtors and others

v Published common sanctions guidance to provide transparency and consistency to the sanctions system, and which the regulators will refer when deciding upon a sanction

v The insolvency service hosting a single web page to publicise sanctions given out by the regulators. All sanctions will be published for a period of at least a year.

v Common decision makers for appeals by complainants and IPs - Regulators will, where their rules permit, use the same independent individuals for key roles in their appeal processes to aid consistency.


The reforms are expected to be in place in Spring.

Jo Swinson said:


“A user friendly, consistent and fair complaints system will help improve confidence in the process, and I’m delighted therefore to announce these reforms. I would especially like to thank the regulators and the profession for responding to the Government’s request to come forward voluntarily with these reforms”.


Philip King, Chief Executive of the Institute of Credit Management said:


“The independent review of fees by a respected individual and other reforms are welcome. They provide an opportunity for honest and transparent dialogue between creditors and the insolvency community that will again serve to break down the barriers that currently exist and support better outcomes for all concerned.

The idea of a single gateway is a welcome development and one that has had our keen support from the outset. It will remove much of the confusion that currently exists, and bring greater clarity to the process that will ultimately benefit both creditors and insolvency practitioners alike. It is about achieving fairness.”



Notes to Editors


  1. Professor Elaine Kempson is an internationally known and respected authority on consumer financial issues, with over 30 years' experience of conducting research and contributing to policy development on various aspects of personal financial services, including banking, saving and investment, insurance, credit and mortgages and pensions. She was appointed as the first independent reviewer of the UK Banking Codes in 2002 and was reappointed to review the Codes again in 2004. She was also appointed, with Sharon Collard, to undertake the first independent assessment of the Financial Ombudsman Service.
  2. The Terms of Reference for the review is available at: http://bis.gov.uk/insolvency/insolvency-profession/review-of-ip-fees .
  3. Edward Davey, the then Minister for employment relations, consumer and postal affairs, issued a statement on 20 December 2011 announcing that the government would explore with interested parties how best to strengthen and simplify the complaints process. Today’s announcement on complaint reform represents the outcome of those discussions.
  4. The fine detail of the package will be worked up early in the New Year. The agreement to establish the portal covers 91% of regulated insolvency practitioners, and six of the eight regulators. The agreement for the rest of the package covers 88% of regulated insolvency practitioners, and five of the eight regulators. The intention is to extend this agreement to cover all regulators in the New Year if possible.
  5. The five parties to the agreement are:- Institute of Chartered Accountants England and Wales; Insolvency Practitioners Association; Association of Chartered Certified Accountants; Institute of Chartered Accountants in Scotland; and Chartered Accountants Ireland.
  6. The Government still intends to bring forward proposals, when legislative time permits, to remove the Secretary of State from the direct authorisation of insolvency practitioners. It is the intention that the Secretary of State as a direct authoriser signs up to as much of the package of reforms as is permitted under legislation until removal from direct authorisation.
  7. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies and debt relief orders) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency


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