Please select a page from the Report Members of the Insolvency Practices Council Chairman's Report Review of Activities during the year Personal Sector Issues Commercial Sector Issues General Issues Future Plans Progress of Recommendations 2000, 2001 Recommendations Glossary Acknowledgments

Review of Activities during the year

Looking back over 2002, the past year could be summarised as a 'changing legal environment' for the insolvency profession. The effects of the Insolvency Act 2000 were being felt and the proposed changes under the Enterprise Act 2002 will have a major impact. There are clear signs that the profession has started to harmonise its complaints procedures and work more closely together in a number of areas.

Over and above the 8 Council meetings the IPC held in 2002, members held 24 other meetings with bodies representing the public interest in insolvency. To be effective the IPC has to have input from the public at large and to achieve this it has met representatives from:

• Institute of Credit Management (ICM)
• Consumer Credit Counselling Service (CCCS)
• Christians against Poverty
• Money Advice Liaison Group
• National Association of Citizens Advice Bureaux (NACAB)

In order to raise the profile of the IPC over 20,000 brochures briefly describing its work have been distributed to the offices of the Official Receivers, the Crown Courts, over 700 CABs, all members of the Institute of Credit Management (ICM), the IPA and members of R3. This exercise has significantly increased the number of people contacting the IPC and we have been able to pass on issues to the appropriate bodies for their attention.

Following our enquiries in 2001 the IPA, ACCA and ICAEW gave us presentations on how their Complaints Procedures work in practice and it was clear that there were some marked
differences in the processes. Since then the three RPBs have joined with the IS in the creation of a Central Complaints telephone service to make it easier for the public to make contact with the correct regulatory body. We are pleased support this change and we are advertising it through our web site The concerns surrounding Voluntary Arrangements remained on the agenda through the year and were the subject of meetings with KPMG, CCCS, NACAB and the ICM and were included in discussions with the major banks.

Fees and disbursements tend to be emotive subjects to all those affected by insolvency and this formed the central part of our full discussions with the banks. We were pleased to be asked to contribute to the revision of Standard of Insolvency Practice (SIP) No 9, which came into effect at the end of 2002. This deals with the transparency of Fees and Disbursements charged by insolvency practitioners in England & Wales. Whilst this goes a long way towards more openness we are disappointed that the emphasis on giving value for money was not given the priority we had requested. Action in relation to Scottish IPs is still awaited.

The IPC highlighted the potential issue of conflicts of interest when a legal adviser to an insolvent company has a network association with the accountancy firm that produces the relevant IP and so is continuously involved both with an insolvent company, its directors, the appointment of the IP and the work of the IP himself. A particular example of this occurred in Scotland. This was passed to the JIC for examination and is currently under review by the ethics sub committee. It was also passed to the Law Society of Scotland and the Law Society for their views on regulatory aspects and their comments are still awaited.

In February the IPC hosted a forum for Money Advisers from the NACAB to hear how personal debt problems are being dealt with at the coalface. It was clear that financial education is a major underlying problem and we were told that there is a mistrust of insolvency practitioners by the general public.

Michael Green, a Research fellow at the School of Business & Regional Development, University of Wales, Bangor was asked by the Insolvency Service to look at IVAs and the personal debt position. He consulted a wide variety of those involved with personal indebtedness including the IPC and his findings make interesting reading.

The current increase in personal debt is creating work for the debt management companies and this is providing opportunities for less scrupulous advisers to prey on vulnerable individuals. Whilst this may seem to be outside the remit of the IPC it was felt that where there is a connection with an IP and a DMC, this should be investigated to ensure that the relationship is honest, open and transparent and that best advice is being given at all times. We have met a number of representatives to discuss this issue.

In our last report we did recommend a streamlining of the regulatory process and we can see that some changes are already being made to speed up the implementation of recommendations. Our dialogue with the JIC has increased in 2002 with the result that information is being exchanged more frequently and issues addressed sooner. We established contact with the Accountancy Foundation Review Board and the Ethics Standards
Board because their role in relation to the accountancy profession is similar to that of the IPC in relation to insolvency practitioners. We intend to maintain contact with the new review bodies of the accountancy profession when they become established in 2003.

Throughout 2001 and the early part of 2002 the IPC along with others lobbied for a change in the legislation relating to the treatment of the matrimonial home in bankruptcy. The Government did manage to find space in the Enterprise Act 2002 for changes to be made which should result in fairer treatment for the bankrupt's spouse/partner. The property will still remain a part of the bankrupt's estate but the trustee will now have to take action to realise the bankrupt's share within three years or lose the right to do so. These changes do not affect the Law as it is in Scotland, but we understand that professional best practice in Scotland has a broadly similar effect and that primary legislation on personal bankruptcy is expected to come before the Scottish Parliament some time in 2004.

Also, as part of the study of the Enterprise Act 2002, we will be considering the changes that may impact upon insolvency practice e.g. the increasing reliance on administration as a company process. The Insolvency Rules are currently under review before being implemented. We have been asked to be involved in this process.

Our involvement with insolvency practitioners themselves remained strong as we took part in the Smaller Practices Conference at Coventry, made presentations to R3 Regional Group meetings in Belfast and Birmingham and participated in the first ICAEW Forum on Insolvency in June. Two more regional presentations in East Anglia and South Yorkshire are already planned for 2003 and we hope to visit IPs in Southampton and Manchester later in the year.

We are grateful to all those individuals and organisations who contacted us during 2002 with their views, comments and complaints. We do rely upon direct contact about insolvency practice from the public at large and it is important that this does continue in the future. That said, the IPC is not an Ombudsman or a Review body and cannot take up individual complaints against IPs and/or their professional bodies.

David Harrison
Secretary

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