The Role of an Insolvency Practitioner

In a civilised society where credit is granted there will inevitably be bad debt. Insolvency practitioners act as the civilised mechanism for resolving bad debt. Insolvency Practitioners, or IPs, are licensed by the Insolvency Service (government employees known as Official Receivers), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Insolvency Practitioners Association (IPA).

To become an IP you must pass a series of exams set by the Joint Insolvency Examination Board (JIEB). These tests cover personal and corporate insolvency and assess the knowledge and understanding that is required for the job. The JIEB exam is incredibly difficult, requiring a high level of both knowledge and practical application.

Once qualified, insolvency practitioners insolvency practitioners uk must ensure that they are adhering to best practice and that their work is carried out with integrity and skill. They must also report to their regulatory body any concerns or failures in their work. Regulators visit insolvency practices on a regular basis, inspecting their systems, case files and compliance documentation (such as GDPR procedures) to establish if they are following best practice. They will also identify any areas where the practice is failing to comply with the law and will request changes be made.

The role of an IP involves dealing with a number of competing interests but fundamentally their main duty is to look after the interests of creditors. They must realise assets and book debts for the benefit of creditors. They must provide advice to individuals or companies in financial distress and encourage them to consider alternatives to formal insolvency procedures before it is too late, such as a company voluntary arrangement or administration.

IPs are also responsible for investigating the affairs of insolvent individuals and companies, where necessary, to investigate any fraudulent or dishonest conduct that has been brought to their attention. This may involve investigating the actions of directors, officers or employees of a company in the course of their duties as an Insolvency Practitioner.

As a result, insolvency practitioners are highly skilled, regulated and trained. However, they are human and like any other professional, there is a risk of malpractice. This can be caused by a lack of training, a desire to maximise fees, or by the nature of insolvency work itself.

In addition, the current licensing regime is flawed. It is not transparent and does not give stakeholders any control over the decisions of an IP. It relies on the insolvency profession’s own self-regulatory bodies which are essentially accountancy and law trade associations that were formed to advance and protect the economic interests of their members rather than to advance or defend the rights of those who are affected by their actions.

This lack of transparency and the absence of a complaints procedure which is weighted in favour of the complainant means that it can take years to resolve an allegation against an IP. This is despite the fact that the industry’s RPBs are supposed to be overseers, promoters and defenders of the insolvency industry.