27 January 2012

"Two years to go nowhere," is how Philip King, Chief Executive of the Institute of Credit Management, has greeted today's announcement from the Government that it will not be seeking to introduce new legislative controls on pre-packs at this time.

He is particularly bemused as to the suggestion, by Ed Davey, The Minister for Employment Relations, Consumer and Postal Affairs at the Department for Business Innovation & Skills, that he will now conduct a review of how the existing controls on pre-packs have been working and whether more could be done within the existing regulatory framework to improve confidence and transparency:

"Given that the Government launched the pre-pack consultation in March 2010, it does make you wonder what they have been doing all this time, and why the original consultation did not look at every angle relating to Pre-packs including the effectiveness of the Statement of Insolvency Practice (SIP)16."

In December 2011, the ICM welcomed the plan to explore the idea of a single regulator, and to legislate to remove the Secretary of State from the direct authorisation of IPs. It also welcomed the plan to see how best to strengthen and simplify processes for handling complaints.

At the time, Philip said that restoring confidence in the insolvency regime was critical for creditors, and is still critical today: "Plans to improve the transparency and disclosure of fee charging in the light of any new complaints regime will go a long way to rebuilding trust between the two parties," he says.

"I think that is why it is so frustrating to be at a point a few months ago where new regulation looked likely, to a position now where such decisions appear to be - as I feared - kicked into the long grass.

"We are no further forward and we should have been."