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Alison Curry, head of regulatory standards at the Insolvency Practitioners Association, explores the implications of the new exclusion contained in the latest 'Dear IP' newsletter.
Dear IP Issue 61 March 2014
In your view what does the new regulation actually mean?
For insolvency practitioners, the new exclusion is very good news indeed and means that most will not need dual regulation--either when taking an appointment or in order to advise a debtor who may be considering a formal insolvency scheme. The broad exclusion for insolvency office holders also clears up a number of historic question marks about when an insolvency practitioner might need to be concerned about Financial Conduct Authority (FCA) regulation when administering an estate (for example, a liquidator collecting a company's book debts, which was a bit of a grey area in the past).
Which insolvency practitioner might this affect primarily?
All insolvency practitioners will benefit from the exclusion when advising on or conducting formal insolvency appointments, which was always our primary concern. This is an industry-wide step in the right direction which recognises the work of insolvency professionals as distinct and separately regulated.
Do you have a view on what 'reasonable expectation' might mean?
'Reasonable' is a term used a great deal in legislation generally and does not have a single definition. What is reasonable will necessarily depend upon the circumstances. Insolvency practitioners are highly trained professionals and the IPA are comfortable that they should be fully able to use their own professional judgment to assess whether they are acting 'in reasonable contemplation of an insolvency appointment'. The recently issued 'Dear IP 61' has clarified that insolvency practitioners are not precluded from advising against a formal insolvency procedure, nor appropriate signposting in such circumstances.
While it is always possible to engineer examples that might be less than clear cut, we believe that the vast majority of cases should present no particular challenge to insolvency practitioners. They are fully accustomed to working within legal and regulatory boundaries.
What would be your advice to insolvency practitioner or those advising them going forward?
The work of a licensed insolvency practitioner, conducting or advising upon insolvency appointments, will not generally require FCA-authorisation. Use your professional judgment, act in accordance with the exclusion (and the Ethic Code and statements of insolvency practice) and document your decisions, strategy and any advice given. If you want to advise specifically on debt management plans or debt arrangement schemes, there is a clear requirement for you to have FCA-authorisation. If you are in doubt about whether your non-insolvency work requires FCA-authorisation, you should ask the FCA for their view.
The IPA have issued a letter to members with some guidance on this issue, which is set out here for some additional guidance. See
Email issued to IPA members
Interviewed by Eleanor Stephens.
0330 161 1234