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Other Activities

Whilst not strictly within the remit of the IPC, we were asked in July 2004 to take part in and responded to the Department of Constitutional Affairs’ (DCA) consultation paper ‘Overindebtedness – A choice of Paths’. The IPC supported the proposals for the three schemes proposed in the Consultation Paper:

  • The reform of court-based Administration Orders (AOs) to help those who want
    to repay their debts to do so, with the possible approval of non-court based
    schemes to exercise similar powers to those available under AOs.
  • An Enforcement Restriction Order to give breathing space to those who want to
    repay their debts and who are likely to be able to do so in a short time.
  • No Income No Assets (NINA) debt relief for those who have no means and no
    likely chance of ever repaying their debts.

However our support for this approach is subject to the proviso that those involved with the giving of advice and the preparation of schemes and repayment plans should be properly trained, tested, authorised and regulated. In the IPC’s view, if any of the arrangements are to be binding on all creditors and/or involve debt composition then it will be important that they are administered by people who are properly trained and required to meet appropriate professional standards. We understand that the IS through its Official Receivers’ offices will be managing the programme and we expect further discussions on these proposals in 2005.

The Scottish Executive : Debt Arrangement Scheme
In June we visited Edinburgh to learn more about the Debt Arrangement Scheme being
established by the Scottish Executive, which is intended to provide a means of helping overindebted people. This came into being at the end of November. It is envisaged that individual debt arrangement plans will be supervised by the voluntary sector rather than by IPs and it is planned to have up to 150 Money Advisers trained to carry out this work.

So far only a few have been approved by the Accountant in Bankruptcy who is administering the scheme. Fund distributors are being appointed. No individual plans have yet been set up and it is therefore too early to assess the progress of this new scheme but as it may have some parallels with the DCA scheme and possibly a simplified IVA the IPC will keep in touch with the Scottish Executive in 2005.

Self-Regulation
During 2004, the IPC decided it would be useful to meet organisations with an interest in
regulation outside of insolvency and therefore took the opportunity to meet the Legal Services Ombudsman (LSO) and Legal Services Complaints Commissioner to discuss complaints and her experiences with the legal system in the UK. This was of particular interest because the Law Society is an insolvency RPB and licenses 150 members although very few undertake insolvency appointments.

The LSO is contributing to the work being undertaken by Sir David Clementi into the regulation of the legal services profession and she supports a single regulator for that profession. It was agreed that the regulatory structure of insolvency is different but it should not prevent it from having a simple structure with high standards. It is interesting to note that there are targets to be met for responding to complaints in the legal profession.

This is not the case in the insolvency profession. Following our attendance at the 2004 IPA Bernard Phillips Memorial Lecture, the IPC met the Deputy Chair of the Better Regulation Task Force (BRTF) to discuss their approach to selfregulation.
Generally speaking, the BRTF favour independent regulation as this allows the
professions to separate regulation from the complaints and management structure of the
organisation.

Contacts with members of the insolvency profession
Whilst the IPC is representing the public interest and makes recommendations to the insolvency profession through the JIC it also has a programme of meeting the RPBs and IPs on their own territory.

Regular meetings are held with the various section heads of the IS. This helps the IPC to have up to date information on which to base their discussions prior to considering recommendations for the profession. Whilst the majority of our contact with the profession is through the JIC we do hold regular meetings with the RPBs who, by their very nature have differing views on some of the key issues affecting the insolvency profession.

We took the opportunity in 2004 to meet the Institute of Chartered Accountants in Scotland on our visit to Edinburgh. Bankruptcy and insolvency legislation is different from that in England and Wales and a large percentage of its members do not restrict themselves to insolvency work and accordingly regard themselves as part of the accountancy world. As a result of this, and the fact that they grant a licence to 112 members, undertake their own training and education, it is seen in many ways as the ‘single regulator’ for insolvency in Scotland. The Law Society of Scotland licenses and monitors only 17 members of whom few take actual cases.

The IPC has a very good working relationship with R3 and regular meetings with the President and the members of the Executive and Technical Committees have provided valuable technical support, which has been especially beneficial for our lay members. Thanks to the continued support and assistance received from R3, members of IPC were able to meet IPs and their colleagues at the following meetings:

  • Speaking to delegates at London, Manchester and Cheltenham on Best Practice.
  • Joining Regional meetings in Leeds and Edinburgh.
  • Participating in the Smaller Practices Forum at Coventry.

Towards the end of the year the Insolvency Creditors Association contacted us. This relatively new group states that it has been created to represent creditors in their actions against IPs. This is of interest to the IPC and meetings will be arranged in 2005 to discuss common ground.

Contacts with organisations outside of the profession
The remit of the IPC is to act for the public interest and it spends much of its time talking to and listening to organisations and individuals that represent the public at large. On the personal side the IPC maintains regular contact with Citizens Advice at various levels including the Money Advisers who work from the offices of Citizens Advice and come in contact with so many individuals with serious debt problems.

We made direct contact early in 2004 with the National Consumer Council which has concerns about the high rates of interest charged on credit and store cards. Where consumer debtors become overstretched these high interest costs impact upon their ability to repay and only serve to exacerbate the problem bringing the issue into the insolvency arena. This then becomes an issue for the IPC to consider. Many and various types of business populate the area of debt management. The Office of Fair Trading issued guidelines for the conduct of these businesses, which are not subject to formal regulation.

The more responsible firms are following the guidelines with the result that the number of complaints being made about some of them has fallen significantly. It is interesting to note that the Insolvency Service Working Group looking at the possibility of a simpler IVA contains representatives of some of the larger firms. These have incorporated IPs into their businesses or have developed close working relationships with IPs who work with them in supervising IVAs and by so doing are to some degree brought within the regulatory net.

Contact with the organisations that represent the business community is varied. Our regular contact with the Institute of Credit Management, which represents over 8,000 members, remains strong and we were pleased to be able to participate in a recent seminar on VAs. We have ongoing discussions with the Federation for Small Businesses. In August we had a meeting with Prof. David Graham and John Tribe from the Kingston Law School who are looking into personal debt, and the DCA consultation paper.

Funding
The members of the insolvency profession fund the IPC; the levy in 2004 was £36 per licence holder. The IPC's budget is modest and it is able to keep costs down by benefiting from the support and hospitality of some of its members, R3, the Insolvency Service and the RPBs.

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