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Insolvency Practitioners Association’s position on the Insolvency Service’s review of the current regulatory landscape: make sure your views are heard in the call for evidence process

For the attention of all members.

Dear member,

We are writing to you following the Insolvency Practitioners Association’s (IPA’s) consultation process with its members on the Insolvency Service’s (IS’s) call for evidence on insolvency practitioner regulation.

We enjoyed meeting those who attended the breakfast consultation meetings and speaking to other members on the telephone. We hope that you found these sessions helpful in putting your views across on this deeply important subject, and we thank you for taking the time to attend the meetings. Understanding and representing member views was vital in the formation of the IPA’s response to the call for evidence.

The IPA’s position paper on the review of the current regulatory landscape, of which the call for evidence forms part, will be published on 4th October. The paper has been informed by your views and created through our working group comprising members from the IPA Secretariat, Board and Standards, Ethics and Regulatory Liaison Committee.

We have prepared a three-page summary of our position on the subject for members to use as a submission, either on its own or alongside their own responses to the call for evidence questions. The outcomes of consultations such as these often hinge on the volume of responses received by Government. Click here to access the document.

As you may be aware, the call for evidence was launched with reference to the Regulatory Objectives (ROs) that were introduced under the Small Business, Enterprise and Employment Act 2015, which apply to the insolvency RPBs (at the end of the year, there will be four RPBs) and the IS as the oversight regulator. The call for evidence will help the Government to assess regulatory performance against the ROs and help its consideration of a move to a single insolvency regulator. It is important to note that the Government is neutral in its approach to this consideration.

The IPA believes it is able to robustly demonstrate that it meets the ROs, but we also recognise that good regulation is a matter of constant improvement and adaptation. To give an example of this, you may recall the IPA’s 2018 review of regulation and governance, which, in the main, saw the strengthening of our complaints processes and the introduction of a condensed and refreshed committee structure to make us more targeted and efficient in how we carry out our responsibilities. It was at the same time that we designed our present regulatory framework tailored to the operations of volume providers of Individual Voluntary Arrangements (IVAs), which involves regulation on an unprecedented, yet still practical scale.

It’s also our view that maintaining and raising standards in the profession is not just a case of sanctions and penalties, but also of providing guidance and education, of sharing best practice and encouraging high standards, of identifying weaknesses and helping practitioners to overcome them. We have evolved our monitoring and disciplinary processes over time to continue to achieve this form of constructive regulation.

Having worked both internally and with our members to consider the strengths and weaknesses of the current regulatory landscape, we believe that there are, naturally, improvements that can be made, and we have taken this opportunity to set these out in our position paper. As we are sure you will appreciate, this is a significant time in the history of UK insolvency regulation – we need to fulfil our responsibility to help ensure that it produces the best possible change.

There will be four RPBs at the end of the year, down from five, as one RPB is ceasing the insolvency side of its regulatory operations. Amongst the four remaining RPBs, we have our specialisms, with two of us, the IPA being one, regulating around 90% of the number of IPs and more by insolvencies covered. This system allows for an appropriate level of specialist knowledge, while remaining fair and collaborative, with a commercial funding model that enables solutions to be implemented quickly. The added benefits of more than one regulator are that improvement is encouraged through competition, and fees are kept stable.

Considering any move to a single regulator, our view on the topic is that we have not identified any substantive benefits to stakeholders that outweigh the risks, particularly when you consider the costs and other challenges that would arise from a total rework of our regulatory structure.

We therefore think it in the best interests of all stakeholders to build on the current system to ensure that insolvency regulation remains fit for purpose, rather than risking losing the strengths we have through a complete revision of the current system.

While there will always be differences across large groups, we have done our best to distill down the majority of opinions and trust that we have represented the collective perspective in the position paper. We hope that you will help to ensure your views are represented in the call for evidence process by also submitting a response. While we are communicating our opposition to the possibility of a ‘one size fits all’ regulator on behalf of our members, adding your voice to ours with your own submission will demonstrate that this position really is the consensus within our sector.

As the only RPB in the country solely dedicated to the complex field of insolvency, which operates with members at the core of its interests, we wish to assure you that we will continue to work to champion robust regulation and ensure that you can carry out your pivotal role in a well-regulated, trusted environment.

Yours faithfully,

Michelle Thorp
Chief Executive Officer
Insolvency Practitioners Association