Restructuring Insolvency Regulation
A Unified Regulatory Process
The Small Business, Enterprise and Employment Bill provides the government’s Insolvency Service with powers to introduce secondary legislation to establish a single insolvency regulator in place of the eight Recognised Professional Bodies who currently regulate the 1,700 insolvency licence-holders.
Better regulation of insolvency practitioners, especially to deal effectively with the minority who underperform, is clearly desirable – some would say overdue – but is there a better solution than the costly and disruptive sweeping away of the current regime?
R3 proposes a Unified Regulatory Process. According to R3 President Giles Frampton, “It would mean the formation of a new entity, perhaps a company limited by guarantee, owned by the RPBs. The RPBs would delegate all powers to the new entity, which would be funded by the RPBs (using the licence fees). The entity would then undertake all licensing, monitoring, complaints handling, investigations and the disciplinary process.”
Frampton continues, “There are numerous potential benefits of a Unified Regulatory Process. There would be coherence and consistency of regulation and enforcement of disciplinary procedures; RPBs would still ‘keep’ their members, with the benefits that this brings to both the RPBs and the individual members; and it should be less disruptive and easier to establish than a single regulator. We might even see some cost savings.”
The public needs to have confidence in the insolvency profession and a clear and effective regulatory regime would help significantly. It is five years since I wrote, in the Summer 2009 issue of RECOVERY, “we could introduce an infinitely more unified and respectable regulatory system” and I am delighted to see that the idea has gained traction.
Date: 3rd July, 2014
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