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
– A choice of Paths’. The IPC supported the proposals for the
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
schemes to exercise similar powers to those available under AOs.
Enforcement Restriction Order to give breathing space to those who
repay their debts and who are likely to be able to do so in a short
- 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
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
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.
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.
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
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
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
Generally speaking, the BRTF favour independent regulation as this allows
professions to separate regulation from the complaints and management
structure of the
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.
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.
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.
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.
The members of the insolvency profession fund the IPC; the levy in 2004
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.