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The Joint Insolvency Committee
Meetings with the Chairman and Secretary of JIC which is our interface with the RPBs have increased to four a year to ensure that the exchange of information is prompt and clear and that action can be taken without undue delay. We are pleased to say that this appears to be working well and current joint projects are being dealt with in a timely fashion. Because of this increased activity, more issues are discussed on an informal basis enabling queries to be dealt with speedily. We are grateful to R3 for their help in dealing with the technical aspects of new initiatives.
The IPC is pleased to note that the Accountant in Bankruptcy in Scotland has now been invited to join the JIC as an observer. The fact is that there are, and always will be, two concurrent insolvency regimes in the UK. The Enterprise Act 2002 applies only in England & Wales. Its principles have yet to be considered in Scotland and any revisions may not take the same form. It will be helpful for the JIC to be able to consider proposals emanating from the Scottish policy makers alongside those arising in England and Wales.
Meeting Insolvency Practitioners
The IPC feels that it is important to meet working IPs from the regions to hear from the grass roots of opinions and concerns. Most IPs have now had the opportunity to meet members of the IPC. In 2003, thanks to the support from R3, we were able to make presentations at regional meetings in Cambridge, Bournemouth and Manchester in addition to our attendance at the Smaller Practices Issues Forum at Coventry. As a result of these face-to-face contacts, the IPC was able to meet over 300 members of the profession.
The main concerns raised at the meetings were; the regulatory structure, the quality of the monitoring process and rogue IPs. The vast majority of IPs favour a simpler regulatory structure with many favouring a single regulator. That said, they do appreciate the problems in making changes to the existing arrangements. With regard to the monitoring process, there is concern that there is too much attention paid to minor infringements rather than looking at the insolvency as a whole for value for money and customer care. Most IPs seem to know of rogue IPs whom they feel are bringing the profession a bad name but, unfortunately, they are reluctant to name names. The RPBs cannot be blamed for not taking action in these circumstances.
Financial Reporting Council
Profession Oversight Board for Accountancy
The Auditing Practitioners Board
The IPC had already established contact with the Accountancy Foundation Review Board and in August approached the successor organisations to discuss common ground. The personnel for the Board have not yet been appointed but it is the intention of the IPC to meet representatives of the Board again in 2004 to see if there are issues to consider even though POBA does not cover insolvency.
We are also in discussion with the Auditing Practices Board, which is setting new ethical standards for auditors; the IPC has a similar remit for ethical standards within the insolvencyprofession. We have responded to the Consultation Paper as this examines the balance between strengthening public perception of the profession while still enabling the profession to carry out its work efficiently and not inhibiting commercial activity.
Consumer Organisations
It goes without saying that the IPC needs to maintain close contact with consumer interest bodies. This is done by the exchange of publications and statistical material as well as meeting members of a number of organisations whose concerns extend to insolvency. A large number of the larger consumer bodies have a wide-ranging agenda and insolvency does not feature high on their list of priorities. This may well change in the near future if over-indebtedness becomes a social problem.
Money advice and in particular debt advice is provided by a large number of organisations with different interests and the IPC is constantly extending its lists of contacts. Citizens Advice (formerly NACAB) with whom we have worked very closely over the past three years has noticed a marked reduction in the level of complaints against debt management companies. ‘We feel that the OFT guidelines are having some effect in persuading these firms to offer a better service’ states Sue Edwards of Citizens Advice.
We have recently also met the National Consumer Council who are currently particularly concerned about credit and over-indebtedness.
Debit Advice and Debit Management
Whilst the quality of debt advice and debt management is strictly only within the remit of the IPC when an IP is involved, it is only sensible to look at this in the context of the whole area. It must be remembered that in debt management, unlike an IVA there is no debt forgiveness and a scheme can run for many years longer than an IVA.
The ‘free’ sector is mainly Citizens Advice with over 700 outlets in the UK often relying on volunteers. They are not able to have fully trained Money Advisers in all outlets. The Consumer Credit Counselling Service (CCCS) is free to debtors but obtains contributions from the creditors. This organisation is the largest of its kind in the UK, has a client base of 31,000 cases and paid £68 million last year to creditors. It confirms that generally speaking, the public at large are happy to deal with their problems over the telephone. CCCS has now started an online facility for first-time clients to obtain details of their services (over 600 visits to the web site were made in January 2004). The telephone interview remains the key part of their operation; they received 120,000 calls to their helpline in 2003.
The fee-charging sector is dominated by a number of debt management companies that advertise widely and charge varying levels of fees for their services. They are widely used by debtors who also have no time or no wish to meet advisers face to face and prefer to use the telephone service.
The IPC accepted an offer to visit to fee charging company, Baines & Ernst Ltd which has over 25,000 live cases and pays over £6m per month to creditors.The quality of advice given by these different groups is dependent upon the level of knowledge and skills of the adviser and the commercial interests of the employers. The vast majority of people with consumer debt problems will tend to turn to the various providers of debt advice/debt management and not to members of the insolvency profession.
The Website
The current site has been in its present form for almost four years and thanks to public awareness of IPC through the web site, the steady flow of contacts continues to increase. A review of its format is to take place in 2004 to ensure that it continues to be seen as beneficial to the general public seeking to make contact with the IPC.
The majority of the contacts are in the form of complaints and generally about fees and costs. The policy is to pass the complaint on to the most appropriate place having taken note of the details for our further consideration and discussion with the profession. We make sure that the public does understand that the IPC cannot be an ombudsman; however, we do like to follow some cases through to a conclusion.
A PDF version of the document is also available. [ Click ]
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