Maintaining standards: the revised Insolvency Code of Ethics

20 November 2025

Lyn Green, Director of Regulation and Policy, IPA

Rowan Duffin Jones, Senior Regulation Officer, IPA

This article first appeared in the October 2025 issue of LexisNexis Corporate Rescue and Insolvency.

Key points

The revised Insolvency Code of Ethics (ICE) applies from the 1 October 2025. The revised ICE aligns the requirements applicable to insolvency practitioners with those in the amended International Ethics Standards Board of Accountants Code (IESBA), which was adopted by the Institute of Chartered Accountants of Scotland (ICAS) on 1 January 2025 and the Institute of Chartered Accountants in England and Wales (ICAEW) on 1 July 2025.
The amendments to IESBA addressed issues that had arisen in the accountancy profession generally, but which may not have been directly applicable to insolvency work. Consequently, there was debate as to how the IESBA amendments should apply to the specialised discipline of insolvency. As a result, some elements of the IESBA have not been included in the revised ICE, such as the Equity, Diversity and Inclusion amendments.
Members of ICAS and ICAEW must comply with the IESBA amendments and are obliged to follow their main codes, even if licensed by another Recognised Professional Body (RPB).

The revised insolvency code of ethics

While there are new sections in the revised Insolvency Code of Ethics (ICE), in our view, the majority of these are really clarifications or expansions of concepts that already existed. The language used to explain these concepts has been updated and ideas that were, perhaps, widely understood but not expressly included in the revised ICE have been inserted.

The revisions slightly amend the fundamental principles of ethics for insolvency practitioners and subsequent paragraphs of the code in relation to three areas in particular:

professional behaviour;
role and mindset; and
technology.

Professional Behaviour

The revised fundamental principle of Professional Behaviour, para 100.1 A1(e), links the principle of professional behaviour to the responsibility to act in the public interest. IPs are required to:

“Behave in a manner consistent with the profession’s responsibility to act in the public interest in all professional activities and business relationships …”

The revised code clarifies how insolvency practitioners (IPs) should behave as professionals, and the context in which they would be acting in their professional lives, as opposed to their private lives.

The concept of a “reasonable and informed third party” test, by which an IP’s conduct may be judged, is well understood and already featured elsewhere in the code. However, to clarify the expectations of an IP’s personal conduct, a revised para 105.1 A2 adds:

“A reasonable and informed third party would expect that an insolvency practitioner, in their professional life, treats others fairly, with respect and dignity and for example does not bully, harass, victimise or unfairly discriminate against others.”

The revised wording refers to an individual’s “professional life” rather than the existing requirement that IPs conducted themselves with courtesy and consideration towards all with whom they came into contact “when performing their work”.

This clarification indicates that the context of an individual’s “professional life” is to be interpreted more broadly than merely “when performing work”. If an IP’s professional status is visible on social media, any posts will likely be seen as made in their professional capacity. For example, LinkedIn profiles generally include professional details, so all LinkedIn posts are likely to be subject to the “professional life” standard of conduct.

However, other social media used may not be as explicit but if the nature of your profession it is obvious from posts on a social media feed, this is also likely to be enough for any posts via that platform to be subject to the “professional life” standard.

There remains the overarching requirement not to bring discredit to the profession and to comply with all relevant laws and regulations (para 100.1 A1). It is possible to bring discredit through the things done in an individual’s private life, for example, an IP is convicted of a criminal offence.

Role and mindset

One of new areas follows from what are called the Role and Mindset changes in the International Ethics Standards Board of Accountants Code (IESBA) and, in particular, the introduction of the idea of an “inquiring mind”.

An inquiring mind is really one with professional scepticism. It is a continuing requirement – not a checklist to be completed only once at the beginning of a particular job.

As with earlier versions of the code, the revised ICE requires IPs to be guided not merely by the terms of the code but also its spirit (R1.9). The revised ICE highlights some matters for an inquiring mind to consider (para 111.5 A2):

New information that has emerged or changes in facts and circumstances.
Question whether information or its source is influenced by bias or self-interest.
Consider whether potentially relevant information is missing.
Is there any inconsistency between known facts and circumstances and the IP’s expectations?
Does the information provide a reasonable basis on which to reach a conclusion, or could other reasonable conclusions be reached?

Bias

The revised code sets out in greater detail than before the concept of bias and the various forms it can take. It provides commentary to help IPs identify potential risks. The types of bias it identifies are (para 117.3 A2):

anchoring bias;
automation bias;
availability bias;
confirmation bias;
groupthink;
overconfidence bias;
representation bias;
selective bias.

We think setting these out will be helpful to practitioners when they are applying the revised ICE.

Technology

Here too, the revised ICE aligns with the IESBA Code, which was amended to respond to the impact of rapid technological advancements and accelerating digitalisation. The amendments to IESBA refer to the generic term “technology” to help future proof their relevance, but consideration was given to developments in artificial intelligence.

The amendments to IESBA included:

Strengthening the code in guiding the mindset and behaviour of professional accountants when using any technology.
Providing enhanced guidance fit for the digital age in relation to the fundamental principles of confidentiality, and professional competence and due care, as well as in dealing with circumstances of complexity.
Paragraph 321.1A1 of ICE highlights some factors to consider when an IP “intends to use the output of technology”:
The nature of the activity to be performed by the technology.
The expected use of, or extent of reliance on the output of the technology.
Whether the IP has the ability to understand, use and explain the technology and its appropriateness for purpose intended, or has access to an expert with that ability.
Whether the technology has been appropriately tested and evaluated for the purpose intended?
Prior experience with the technology and whether its use for specific purposes is generally accepted.
The firm’s oversight of the design, development, implementation, operation, maintenance, monitoring, updating or upgrading the technology.
The controls relating to the use of technology, including procedures for authorising user access to it and overseeing such use.
The appropriateness of the inputs to the technology, including data and related decisions, and decisions made by individuals in course of using the technology.

Conclusion: A smooth transition

As with any revision to the rules and regulations applicable to insolvency work, there will be a period of familiarisation as IPs and regulators become acclimatised to the revised ICE. Given the changes are largely consistent with existing practice, we expect that they will become second nature relatively quickly and any required changes to an IP’s practice can be implemented smoothly, without significant upheaval.

IPs will nonetheless need to familiarise themselves with the changes to ICE, particularly as the use of artificial intelligence becomes more widespread.