The future of insolvency regulation
Applies to England, Scotland and Wales
Read the full outcome
Detail of outcome
The government is publishing its response to the consultation on ‘The Future of Insolvency Regulation’, which ran between 21 December 2021 and 25 March 2022. The consultation sought views on a comprehensive package of reforms to the insolvency practitioner regulatory framework.
The government’s response summarises the views of the many stakeholders who replied to the consultation, and sets out the reforms that the government will take forwards when Parliamentary time allows. Most significantly, this includes:
- expanding regulation to include firms providing insolvency services, alongside the existing regulation of individual Insolvency Practitioners
- challenging the current four professional body regulators to deliver significant and measurable improvements to the quality of regulation through non-legislative means, whilst keeping options to replace the current regulatory model with a single regulator of Insolvency Practitioners under review
- reforming the way ethical and professional standards for the profession are set
- introducing a public register of authorised Insolvency Practitioners and firms providing insolvency services, that will include relevant and proportionate regulatory information
- developing and consulting on proposals to introduce a compensation/redress scheme for those affected by an Insolvency Practitioner’s acts or omissions
- strengthening the bonding framework, which requires Insolvency Practitioners to hold security in the event of their fraud or dishonesty
This is a significant package of reforms which addresses the current weaknesses, closes a loophole in the framework, and provides opportunities for further reform. It will strengthen insolvency regulation and increase public confidence in the framework.
Original consultation
Consultation description
The Government is consulting on changes to the way the insolvency profession is regulated. The current system has been in place for over 30 years and needs reform to be able to keep pace with developments in the insolvency market. The key changes set out in the consultation include:
- establishing a single independent regulator to sit within the Insolvency Service, replacing the current system of using Recognised Professional Bodies
- extending regulation to firms that offer insolvency services, as the current regime only covers individual Insolvency Practitioners
- creating a public register of all individuals and firms that offer insolvency services
- creating a system of compensation and redress
- amendments to the current arrangements for Insolvency Practitioners to hold security (bonding) to cover losses in the event of fraud or dishonesty
These changes will help strengthen and modernise the regulatory regime which will be essential to encouraging business and investment as the country builds back from the pandemic. They will help improve public confidence and ensure the UK maintains its reputation as having a first class insolvency jurisdiction.
Documents
Updates to this page
Last updated 12 September 2023 + show all updates
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Government response added
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Error in closing date corrected, adding an additional day.
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First published.