Who regulates Insolvency Practitioners?
If you are experiencing financial worries, you may end up speaking to an Insolvency Practitioner. These are professionals who help manage everything once a business has become insolvent to ensure all actions are fair and legal.
Insolvency affects a lot of people, such as creditors, employees, directors and suppliers, which is why the work of insolvency practitioners must be carefully monitored. This is where regulation comes into play.
In this article, we look at who regulates Insolvency Practitioners, the standards they must follow, and how to make sure you choose an insolvency practitioner who is appropriately qualified and trustworthy.
What do Insolvency Practitioners do?
Insolvency Practitioners are trained and qualified professionals who are appointed and authorised to deal with formal insolvency proceedings. They can help guide an individual through bankruptcy or help a company through liquidation.
The role of an Insolvency Practitioner is part legal and part financial. They are appointed to oversee the insolvent company, which can include taking control of assets and bank funds, dealing with creditors and working to achieve the best possible outcome for all involved.
An Insolvency Practitioner may deal with:
- Bankruptcy and Individual Voluntary Arrangements
- Liquidation, administration or Company Voluntary Arrangements
- Selling of business assets to repay creditors
- Negotiating payment plans with creditors
Who is in charge of regulating Insolvency Practitioners?
In the UK, there are four main recognised professional bodies that oversee Insolvency Practitioners. They are professional membership bodies that also act as regulators; they are:
- The Institute of Chartered Accountants in England and Wales (ICAEW)
- The Institute of Chartered Accountants of Scotland (ICAS)
- The Insolvency Practitioners Association (IPA)
- Chartered Accountants Ireland (CAI)
Each of these professional bodies has the power to issue licences, monitor the practices of Insolvency Practitioners and begin disciplinary proceedings if required. These bodies are also regulated by a government agency called the Insolvency Service to ensure they are doing their jobs properly.
While Insolvency Practitioners may be private companies, they are tightly controlled by professional bodies and the government to ensure they follow best practices and are fair and legal in their actions.
What are the standards Insolvency Practitioners must meet?
In order to become an Insolvency Practitioner, an individual must have the right skills and qualifications to practice. The standards they must meet include:
- Pass the Joint Insolvency Examination Board exams to demonstrate their legal and financial knowledge
- Work on real-life insolvency cases to gain relevant hands-on experience
- Demonstrate they are an honest and fair person who can be trusted to complete their role with honesty and integrity
- Have the right level of professional indemnity insurance to ensure cover should something go wrong.
These are the basics, but it’s also essential that Insolvency Practitioners keep up to date with the latest legislation and best practices. They must also follow a professional code of ethics and are always expected to act in the best interest of creditors.
How are Insolvency Practitioners monitored?
The professional bodies that monitor Insolvency Practitioners carry out regular inspections and audits to ensure they are following the rules and doing things correctly. They may look at case files to review the decisions that were made and whether the right procedures were followed.
It’s also their job to check how money and assets have been handled, follow up on any complaints or concerns raised, and ensure the practitioner stays up to date with their training and legal obligations.
If the professional bodies uncover any actions that are not above board or break the code of ethics, they have the power to take disciplinary action. This can include a penalty, a formal warning, or, in the most extreme cases, revoking their licence to practice. In addition to the professional bodies, if misconduct occurs, the Insolvency Service may also get involved and investigate the practitioner.
Why is it important to regulate Insolvency Practitioners?
The financial and legal industries are among the most regulated sectors, and for good reason. The risks and consequences of practitioner misconduct can be devastating for all involved. Regulators exist to ensure that people are protected and the process is fair – without them, the risks of misconduct would be far greater.
Regulations help protect creditors, prevent exploitation of people and companies involved, instil confidence in the insolvency procedure, keep proceedings legal, fair and ethical and ensure consistency in how insolvency cases are handled.
Are you looking for an insolvency practitioner?
At Bridge Newland, our team of fully licensed and regulated Insolvency Practitioners are here to help. All initial advice is free of charge so that you can get a clearer understanding of your position and the options available. Please contact us to discuss your circumstances.
Categorised in: Insolvency Reviews & Advice
