Corporate report

Annual Review of Insolvency Practitioner Regulation 2019

Published 26 August 2020

© Crown copyright 2020

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1. Overview

The Insolvency Service is an executive agency of the Department of Business, Energy and Industrial Strategy (BEIS) that helps to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors.

The Secretary of State, by order, recognises independent professional bodies, known as the Recognised Professional Bodies (RPBs) for the purpose of authorising their members to act as insolvency practitioners. Under the provisions of the Insolvency Act 1986, any individual who acts as a liquidator, trustee in bankruptcy, administrator, administrative receiver, or as nominee or supervisor of a voluntary arrangement must be authorised to act as an insolvency practitioner by an RPB.

Acting as oversight regulator of insolvency practitioners on behalf of the Secretary of State for BEIS, the Insolvency Service works with the insolvency profession ensuring that standards are maintained or improved where necessary, and that professional misconduct is addressed. The Insolvency Service actively monitors the RPBs, through a combination of desktop monitoring, inspection visits and themed reviews, details of which are published on the Agency’s website. The regulatory objectives to which both the Insolvency Service and the RPBs work are:

  • Having a system of regulation that secures fair treatment for persons affected by their acts or omissions, reflects the regulatory principles and delivers consistent outcomes.

  • Encouraging an independent and competitive profession whose members deliver quality services at a fair and reasonable cost, acts transparently and with integrity and consider the interests of all creditors in any particular case.

  • Promoting the maximisation of the value and promptness of returns to creditors.

  • Protecting and promoting the public interest.

The Complaints Gateway acts is a single point of contact for making a complaint about the conduct of an insolvency practitioner and enables the Insolvency Service to monitor the progress and outcome of those complaints.

During 2019, insolvency practitioners were regulated by five RPBs:

  • Association of Chartered Certified Accountants (ACCA)

  • Chartered Accountants Ireland (CAI)

  • Institute of Charted Accountants in England and Wales (ICAEW)

  • Institute of Chartered Accountants of Scotland (ICAS)

  • Insolvency Practitioners Association (IPA)

On 31 December 2019, the ACCA ceased authorising and regulating insolvency practitioners, with most of the ACCA’s regulatory functions having been undertaken since 2017 by the IPA under a collaborative agreement. In February 2019 the ACCA submitted a formal request to the Secretary of State to cease acting as an RPB. The ACCA notified all its licensed insolvency practitioners during 2019 that it was ceasing activity in this field and insolvency practitioners that wished to continue in practice moved to other bodies (the IPA and ICAEW) from the start of this year. A technical change to legislation will be made to formally remove the ACCA’s status as an RPB when parliamentary time allows.

The data in this report is derived from information obtained annually from the RPBs and the Complaints Gateway.

During 2019, the Insolvency Service issued a Call for Evidence to seek views on the regulation of insolvency practitioners, the impact of the introduction in 2015 of statutory regulatory objectives for the RPBs and the levels of confidence in the current regulatory framework. The Call for Evidence ran from July until October 2019 and responses were received from a wide range of stakeholders. A Government response to the Call for Evidence will be published in due course.

2: Regulatory and Disciplinary Statistics

2.1 Authorisations

Table 1: Number of authorised insolvency practitioners (2019-2020)

Year Category ACCA CAI ICAEW ICAS IPA Total

| — | — | — | — | — | — | — | — |

2020 IPs as at 1 January 0 42 805 88 618 1,553
2020 Appointment takers 0 40 610 72 514 1,236
2019 IPs as at 1 January 83 45 794 92 551 1,565
2019 Appointment takers 78 43 594 74 455 1,244

2.2 Monitoring

Table 2: Number of RPB monitoring visits to insolvency practitioners in 2019

Visit type ACCA ICAEW ICAS IPA CAI

| — | — | — | — | — | — |

Routine 17 170 9 149 9
Targeted 0 4 0 4 0
Total 17 174 9 153 9

Targeted visits can happen for several reasons, for example following information received by the RPB which needs to be investigated/verified, from an order by a committee following a routine visit or following several complaints about an area of practice.

Table 3: Outcomes following routine monitoring visits to insolvency practitioners concluded in 2019[footnote 1]

Category ACCA CAI ICAEW ICAS IPA

| — | — | — | — | — | — |

Satisfactory 14 2 88 - 85
Further visit to be carried out 1 - 5 - 8
Further visit carried out - - 1 - -
Licence restricted - - 1 - 4
Licence withdrawn - - - - -
Confirmations[footnote 2] - 6 72 - -
Undertakings - 1 24 - 3
Plans for improvement - - - - 15
Compliance review requested - - 21 - 1
Decision not yet finalised 2 - 6 9 21
Regulatory penalties - - 9 - 1
Referred for investigation - - 22 - -
Case progression and closure updates - - 15 - -
Disciplinary referrals - - - - 12
Reminders/Warnings/Conditions/Progress reports issued - - - - 16

Table 4: Outcomes following targeted monitoring visits to insolvency practitioners concluded in 2019[footnote 3]

Category ICAEW IPA

| — | — | — |

Satisfactory report – no further action 1 3
Further visit carried out 1 -
Licence withdrawn - 1
Compliance review requested 2 -
Regulatory penalty 1 -
Disciplinary referral 2 2

2.3 Complaints

Table 5: Sanctions following complaints in 2019

Category ACCA ICAEW ICAS IPA CAI

| — | — | — | — | — | — |

Warning or caution (not published) 1 1 - 7 -
Undertaking, consent, agreement, reprimand, fine - 8 - 18 1
Exclusion and fine

| - | - | - | - | - |

Ongoing into 2020
- 10 - 32 -

Table 6: Complaints remaining open over 12 months

This table shows how many complaints were open with each RPB at 1 January 2019 ordered by year of when they were opened. Each RPB provides this information to the Insolvency Service quarterly for progression to be tracked and, when appropriate, challenged.

RPB Pre- 2015 2015 2016 2017 2018

| — | — | — | — | — | — |

ICAEW 14 19 23 26 46
ACCA 0 0 0 8 3
IPA 6 5 0 8 42
ICAS 0 0 0 0 0
CAI 0 0 0 0 0
Total 20 24 23 42 91

2.4 Regulatory Outcomes

Table 7: Summary of regulatory and disciplinary sanctions issued in 2019

RPB IP Sanction Reason

| — | — | — | — |

ICAEW <IP’s name removed> Consent order and reprimand costs of £2,755 Failed to comply with Rule 18.16(4) of Insolvency (England and Wales) Rules 2016, failed to correctly complete the notice of her appointment as trustee in bankruptcy - failed to comply with Rule 10.76 (1) Insolvency (England and Wales) Rules 2016 and incorrectly referred to Rule 6.141 of the Insolvency Rules 1986 as being the relevant rule
ICAEW <IP’s name removed> Severely reprimanded, fined £17,500 and pay costs of £4,117 Failure to reply to correspondence sent to him and his staff in connection with the stock held by ‘X’ Limited in sufficient detail or in a timely manner
ICAEW <IP’s name removed> Severely reprimanded, fined £1,000 and pay costs of £6,242.50 Failure to adequately consider debtor’s financial circumstances and recommended an IVA when this may not have been the most appropriate debt solution at the time
ICAEW <IP’s name removed> Reprimanded, fined £1,050 and pay costs of £3,132 Failure to issue a completion certificate for an IVA in a timely manner
ICAEW <IP’s name removed> Reprimanded, fined £500 and pay costs of £500 Failure to terminate an IVA in a timely manner
ICAEW <IP’s name removed> Reprimanded, fined £500 and pay costs of £1,000 On three occasions provided incorrect information regarding the issue of a certificate of completion when the IVA was to be terminated
ICAEW <IP’s name removed> Regulatory penalty of £750 Providing poor advice on three IVAs
ICAEW <IP’s name removed> Regulatory penalty of £1,500 Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations by drawing fees on a time cost basis, without first giving creditors a fee estimate
ICAEW <IP’s name removed> Regulatory penalty of £500 Failure to undertake a compliance review in accordance with Regulation 3.13 of the Insolvency Licensing Regulations and Guidance Notes
ICAEW <IP’s name removed> Regulatory penalty of £1,000 Breach of the Code of Ethics in relation to fees received under a work referrer contract
ICAEW <IP’s name removed> Regulatory penalty of £1,500 Failure to comply with SIP 2
ICAEW <IP’s name removed> Regulatory penalty of £750 Failure to comply with SIP 2
ICAEW <IP’s name removed> Regulatory penalty of £1,500 Drawing unauthorised category 2 expenses of £7,133
ICAEW <IP’s name removed> Regulatory penalty of £250 Failure to undertake an annual compliance review and thereby failing to comply with Regulation 3.13 of the Insolvency Licensing Regulations and Guidance Notes
IPA <IP’s name removed> Reprimand, fine of £1,000 and contribution of £600 towards costs Failure to deal with the bankrupt’s interest in the matrimonial home before it re-vested.
IPA <IP’s name removed> Reprimand, fine of £2,000 and pay costs of £2,980 Drawing an IVA variation fee which exceeded that authorised by creditors, failure to respond to correspondence issued on the debtors’ behalf by the Citizens Advice Bureau, and inadequate communications with the debtors in relation to modifications to the proposal and increased contributions.
IPA <IP’s name removed> Severe reprimand, fine of £2,000 and pay costs of £1,440 Proceeding with a creditors’ meeting seeking approval of an IVA and inappropriately caused the debtor’s bank account to be frozen by contacting the bank regarding the proposed IVA having been advised by the debtor she did not want to proceed, issuing further correspondence to the debtor incorrectly referring to herself as the debtor’s insolvency practitioner, and inappropriately passed the debtor’s details to a third party claims company.
IPA <IP’s name removed> Severe reprimand, fine of £2,000 and to contribute towards costs SIP16 disclosure breaches.
IPA <IP’s name removed> Reprimand, fine of £2,000 and to contribute towards costs SIP16 disclosure breaches.
IPA <IP’s name removed> and <IP’s name removed> Allegation 1: Severe reprimand and fine of £75,000; Allegation 2: severe reprimand and fine of £5,000 Drawing of unauthorised remuneration on various IVAs
IPA <IP’s name removed> Reprimand, fine of £1,000 and contribution to costs SIP16 disclosure breaches.
IPA <IP’s name removed> Reprimand, fine of £1,500 and contribution to costs Issuing a termination notice in error.
IPA <IP’s name removed> Reprimand, fine of £2,000 and contribution to costs Issuing a variation report to creditors containing incorrect information and issuing misleading and discourteous communications to a debtor in response to their requests for information.
IPA <IP’s name removed> Reprimand and fine of £1,500 Moving a company from administration to creditor’s voluntary liquidation when there was no prospect of any distribution to the unsecured creditors of the company.
IPA <IP’s name removed> Severe reprimand, fine of £3,000 and contribution to costs Failure to deal with an expense claim from a Claims Management Company (CMC) for expenses incurred in relation to significant PPI award in a professional manner, issuing a proposal and reports to creditors that failed to provide details of an agreement with another CMC that he had retained to recover PPI compensation.
IPA <IP’s name removed> Severe reprimand, fine of £5,000 and contribution to costs Failure to respond to communications from a creditor regarding its claim and failure to ensure that creditor’s request for direct contact and payment of dividends was acted upon in a timely manner.
IPA <IP’s name removed> Reprimand, fine of £5,000 and contribution to costs Allowing an unacceptable delay before returning monies due to a bankruptcy estate and errors in correspondence concerning the amounts repaid to the bankruptcy estate, failure to verify whether a creditor of the estate still wished to receive dividends despite evidence being provided that the debt had been written off.
IPA <IP’s name removed> Severe reprimand, fine of £5,000 and contribution to costs Making inaccurate statements and errors in reports to creditors and the debtor, failing to provide adequate and accurate information in a variation report to creditors to enable an informed decision to be made on the propose variations to an IVA, failing to respond satisfactorily to a subsequent creditor request for additional information to enable an informed decision to be made on the proposed variations to an IVA, and making errors in dividend communications to a creditor, and failed to respond to concerns raised by that creditor about the payment of dividends.
IPA <IP’s name removed> Allegation 1: reprimand, fine of £1,500 and contribution to costs, Allegation 2: reprimand, fine of £2,000 and contribution to costs Breach of SIP3.3 by failing to retain adequate records of his initial discussions with the debtor, and inadequate dealing of debtor’s complaint
IPA <IP’s name removed> reprimand, fine of £21,000 and contribute £3,090 towards costs Drawing of unauthorised remuneration on three occasions
IPA <IP’s name removed> Severe reprimand, fine of £6,500 and contribution of £4,750 towards costs Breaches of SIP3.1 including failing ensure that the debtor received appropriate initial and/or ongoing advice, failure to retain a copy of any original file note completed by his firm’s adviser in respect of initial contact with the Debtor, failure to advise the complainant that it would be appropriate to have a face to face meeting when the complexities of her circumstances became apparent, failure to contact major creditors such as HMRC to ascertain their views prior to issuing the proposal, failure to seek to establish the position in respect of any security held by HMRC and the impact this may have upon voting, failure to deal with the complaint to the firm in accordance with the firm’s procedure, and deficiencies in the Debtor’s IVA proposal.
IPA <IP’s name removed> Reprimand, fine of £2,000 and contribution of £752 to costs Issuing an inaccurate notification to the debtor as to the status of the IVA, failure to progress the IVA in good time by taking more than nine months after the receipt of the final monthly contribution to write to the debtor regarding the potential release of equity in a property, failure to issue a progress report on the IVA to the debtor and creditors in breach of the Insolvency Rules 2016.

2.5 Pre-pack Administrations

Monitoring of Statements of Insolvency Practice 16 (SIP 16) disclosure statements in pre-pack administration[footnote 4]

SIP 16 sets out what should be included in the insolvency practitioner’s disclosure statement issued to all creditors of the pre-pack administration. The statement is a summary of the transaction, why it was in the best interest of creditors and best option available.

In order to be compliant with a statement, the insolvency practitioner acting as administrator must send a copy to all creditors within seven days of the pre-pack administration, providing as much detail as possible. The practitioner must also send a copy to their RPB and include the statement of proposals filed at Companies House.

The RPBs have responsibility for the monitoring of SIP 16 disclosure statements.

Table 8: The monitoring of SIP 16 statements by the RPBs during 2019

RPB SIP 16 statements received SIP 16 statements monitored Compliant statements Non-compliant statements % compliant Regulatory action

| — | — | — | — | — | — | — |

ACCA 31 31 26 5 84% 0
CAI 1 1 1 0 100% 0
ICAEW 271 33 29 4 88% 1
ICAS 1 1 1 0 100% 0
IPA 169 169 124 45 73% 2
Total 473 235 181 54 77% 3

Table 9: Analysis of pre-pack administrations in 2019

The table below summarises key information obtained from all the 473 SIP 16 statement received by the RPBs.

Information collected Number of pre-packs

| — | — |

Sales to connected parties 260
Marketing activities carried out by the administrator 430
Sales involving deferred consideration 132
Viability reviews included in statements 47
Referrals to the pre-pack pool 23

3: Complaints Gateway Statistics

The Complaints Gateway (‘the Gateway’) continues to be the channel for most complaints against insolvency practitioners. Regular meetings are held between the Insolvency Service and the RPBs to monitor the Gateway’s performance and address any issues.

During 2019, the Gateway received 856 complaints, an increase of 3% in comparison to 2018. Of these, 428 (50%) were referred to RPBs, 116 were rejected, 310 were closed[footnote 5] and 2 were awaiting further information to reach a decision.

The Gateway only refers cases which require consideration by the RPB. For each complaint, the Gateway considers whether it falls within the scope for referral to the RPB, based on the information provided on the complaint form along with any supporting evidence. All complainants have the right of appeal for rejected complaints[footnote 6]. In 2019, there were 16 appeals, 5 of those complaints were upheld and 11 rejected.

Table 10: Complaints received by the Gateway

Complaints 2019

| — | — |

Total Complaints 856
Referred to the RPBs 428
Rejected/ Closed 426
On Hold 2

Table 11: Complaints outcomes

Month Complaints received Referred to RPB Rejected Closed

| — | — | — | — | — |

January 70 25 11 34
February 77 34 17 26
March 53 25 15 13
April 55 22 13 20
May 63 27 12 24
June 65 46 3 16
July 76 34 9 33
August 81 43 4 34
September 81 44 7 30
October 97 57 9 30
November 77 45 10 22
December 61 26 6 28
Total[footnote 7] 856 428 116 310

Table 12: Referred complaints by subject matter

Complaint type Total complaints %

| — | — | — |

Communication breakdown/failure 107 25%
Sale/dealing with assets 12 3%
Remuneration 7 2%
Misconduct / irregularity at creditors meeting 3 \<1%
Delay in dividend payment 2 \<1%
Conflict of interest 14 3%
Professional competence and due care 90 21%
Professional behaviour 56 13%
Integrity 2 \<1%
Transparency 1 \<1%
Referred by IP Regulation Section 12 3%
Intelligence 4 \<1%
SIP 1 14 3%
SIP 2 2 \< 1%
SIP 3 99 23%
SIP 9 1 \<1%
SIP 16 / pre-pack 2 \<1%
Total 428 100%

Table 13: Referred complaints by insolvency procedure

Insolvency type Number of complaints %

| — | — | — |

Individual Voluntary Arrangement (IVA) 167 39%
Bankruptcy 45 11%
Liquidation 103 24%
Administration 77 18%
Company Voluntary Arrangement (CVA) 6 1%
Trust Deed 20 5%
Sequestration 6 1%
Other 4 1%
Total 428 100%

Table 14: Referrals by type of complainant

Complainant Type Number of complaints %

| — | — | — |

Debtor 185 43%
Debtor’s family/friend 18 4%
Debt Advisor 2 \<1%
Creditor 134 31%
Company Director 36 8%
Insolvency Practitioner 19 4%
Employee 13 3%
Shareholder 6 1%
Accountant in Bankruptcy 4 \<1%
Insolvency Service 7 2%
Solicitor 1 \<1%
Other 3 \<1%
Total 428 100%

Table 15: Referred complaints to authorising bodies

RPB Complaints referred %

| — | — | — |

ACCA 11 3%
CAI 5 1%
ICAEW 147 34%
ICAS 11 3%
IPA 254 59%
Total 428 100%

Table 16: Reasons for complaints rejection

Complaint Type Number rejected % of total complaints

| — | — | — |

Conduct over 3 years old 16 14%
Complaint about the effect of the insolvency procedure 75 64%
Complaint about a commercial matter 18 15%
Directors’ conduct report confidentiality 3 3%
Actions of a third party 3 3%
IP not appointed 1 1%
Total 116 100%

Table 17: Reasons for complaints closure

Closure reason Number

| — | — |

Asked to initially complain to the IP 77
No response to request for information/evidence 170
Not a complaint about an IP 37
Already been through the complaints process 12
Complaint withdrawn 11
Insolvency outside the UK/not a UK IP 3
Total 310

4. Complaints against RPBs

As oversight regulator, the Insolvency Service investigates complaints about the RPBs and the way in which they carry out their regulatory functions. A conclusion is drawn on whether (or not) the RPB has complied with its relevant procedures and regulatory objectives.

Table 18: Complaints Received about RPBs

Authorising Body Complaints received Upheld Partially upheld[footnote 8] Rejected Ongoing

| — | — | — | — | — | — |

ICAEW 3 0 1 2 0
IPA 8 1 0 5 2
CAI 0 0 0 0 0
ICAS 1 0 0 1 0
ACCA 0 0 0 0 0
Total 12 1 1 8 2

  1. Visit outcomes can fall into more than one category ↩

  2. The IP will provide confirmation to the RPB that specific matters would be addressed ↩

  3. Visit outcomes can fall into more than one category ↩

  4. All SIPs can be found at www.r3.org.uk/technical-library/england-waqles/sips/ ↩

  5. Complaints are closed if the Gateway is unable to contact the complainant or the further information required to assess the complaint has not been provided by the complainant within a reasonable timeframe ↩

  6. Complaints can be rejected for varying reasons -see table 16 ↩

  7. 2 complaints still being dealt with at time of data collection ↩

  8. Complaint was upheld as it was determined that the RPB had incorrectly closed an investigation without considering all concerns raised. The complaint was re-opened, and investigation is ongoing ↩

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