The government has announced plans to streamline the operations of the Insolvency Service (IS) in a bid to create more competition in the market.
Under measures included in the draft Deregulation Bill, the regulation of around 60 insolvency practitioners (IPs) currently handled by the Secretary of State for Business, Innovation and Skills (BIS) will be transferred to one of the seven independent professional bodies which are responsible for around 1,700 insolvency practitioners.
Business minister Jo Swinson said this move would remove a perceived conflict of interest, as the government is also the oversight regulator. It will also increase the range of sanctions for rogue IPs, as the Secretary of State cannot impose fines or other sanctions against errant IPs and can only remove their authorisation, unlike the independent regulatory bodies who have options such as fines and restricting the number and types of insolvency appointments their members can take.
Swinson also announced proposals to allow IPs to qualify in either personal or corporate insolvency, or both as is the case now. She said this will reduce the time and money it takes to qualify for those who choose to specialise, opening up the industry to more people and boosting competition in the sector. The new qualifications are expected to take one to two years to complete, compared to the two to three years currently.
'Transferring the government's power to regulate IPs to independent regulators will bring greater clarity and consistency to the regulatory regime. It will also help cut costs in the industry through lower fees. The government can now concentrate on its role as oversight regulator of the insolvency industry,' Swinson said.
Other insolvency measures in the draft Deregulation Bill include simplifying the procedure whereby the Secretary of State or official receiver obtains information on director misconduct; enabling information to be obtained direct from any person without requiring authority from the insolvency office-holder; and amending procedures around the appointment of interim receivers, to increase creditor choice.
The government has also indicated it intends to introduce legislation to strengthen the powers of the Secretary of State as oversight regulator at a later date.
