The Institute of Credit Management (ICM) is calling for a radical change to the current regulatory framework for Insolvency Practitioners to better protect the interests of unsecured creditors.
Philip King, the ICM's Chief Executive, says that a new regime is required that achieves the best possible outcomes for those losing money when a customer goes bust.
But he also admits that in many cases, creditors have themselves to blame for failing to fully engage with the insolvency process: "If creditors don't play their part in the insolvency, then they can't really complain about the outcome or the work of the Insolvency Practitioner," he says.
Responding to the soon to close Insolvency Service Consultation, the ICM particularly supports the proposal for the establishment of an independent complaints body, especially in relation to reviewing fees and remuneration: "Our Members who, for the most part, are unsecured creditors want a speedy, consistent, and fair response to complaints and are averse to any additional complication or levels of bureaucracy," he says.
Philip believes that the expertise within the ICM could be of significant value to any new body, and the Institute is keen to offer this expertise to assist in the process: "The independent complaints body should comprise a majority of lay members (but with sufficient IP expertise input) and have a chair of sufficient gravitas. Its activity could be overseen by the Insolvency Service," he adds.
This, he says, raises the question of unnecessary costs being incurred through frivolous or vexatious complaints: "In such cases, there should be a mechanism for the costs to be borne by the complainant which might also stifle the emergence of a 'no win - no fee' industry," he says.
To protect against frivolous or vexatious complaints, Philip thinks that one safeguard might be a requirement that any complaint has to be supported by the Creditors Committee: "This might also serve to encourage engagement by unsecured creditors at earlier stages in the insolvency process," he says.
As well as the establishment of an independent complaints body, the consultation also looks to set clear objectives for the regulatory regime, a point that is especially welcomed: "We need to see 'transparency' and we need to see 'value for money'," Philip says, "and transparency in terms of remuneration should be mandatory."
He also says that the Insolvency Service as oversight regulator should monitor standards to ensure they are achieving the desired outcome: "More than this," he concludes, "It should hold the Recognised Professional Bodies (RPB) accountable if/when it believes that they or their standards are failing."
