Parliamentary Under Secretary of State for Enterprise and Markets
(): The Government has
today published its response to its consultation ‘The Future
of Insolvency Regulation’, which was published in December
2021. This consultation was open for 13 weeks and outlined
proposals for significant reform to the regulatory framework for
Insolvency Practitioners.
The insolvency profession plays a key role in driving economic
growth and supporting those in financial distress. The unique
responsibilities that Insolvency Practitioners bear and the
decisions they take help save jobs and businesses, and deliver a
fair, effective and orderly winding up to deal with financial
failure where that is not possible. The vast majority of
Insolvency Practitioners do a good job in challenging
circumstances, but there continue to be instances of poor conduct
that directly impact those closely involved. This tarnishes the
reputation of the whole profession and undermines confidence.
Insolvency Practitioners should be regulated within a modern
framework that reflects the way the insolvency sector has
developed since formal insolvency regulation was first introduced
in 1986.
The Government received 102 detailed responses to the
consultation. Officials also obtained further relevant evidence
through targeted stakeholder engagement. Most proposals received
significant support amongst a broad range of stakeholders. We are
grateful for the views and evidence provided as part of the
consultation process, which has informed the package of reforms
we will take forward when Parliamentary time allows. This most
notably includes:
- 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
- expanding regulation to include firms providing insolvency
services, alongside the existing regulation of individual
Insolvency Practitioners
- 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
The Government’s response to the consultation reaffirms its
commitment to ensuring the insolvency profession is effectively
and robustly regulated, with a regulatory framework fit for the
future. These reforms, which represent the biggest change to the
regulatory framework in nearly 40 years, will address weaknesses
with the current regulatory framework, modernise the regime and
increase public confidence in regulation.
A copy of the consultation response may be found online at:
https://www.gov.uk/government/consultations/the-future-of-insolvency-regulation
