Reform to complaints system will enhance understanding of insolvency process
R3 welcomes a package of reforms announced today including a complaints gateway and common sanctions guidance, but is confident work done by insolvency practitioners already represents value for money.
The OFT addressed concerns over fees when it examined them in 2010 and concluded in their own words that the insolvency industry is ‘an important lubricant to an efficient economy’ and works well in the ‘majority of cases’, so this issue has recently been examined.
R3 President Lee Manning comments:
“Insolvency Practitioner (IP) work represents good value for money, otherwise fees simply would not be agreed by creditors. We already have a system in place that returns as much money to creditors as possible – that is the insolvency practitioner’s statutory duty.
“Improving accessibility and consistency to the complaints system is something our members are keen to support, especially given the large number of regulators for our profession. We are also keen to promote understanding amongst the creditor community about the role they can play in the insolvency process and the options available to them.”
Today’s announcement correctly states that insolvency practitioners will ‘always be dealing with situations of stress’ and that all insolvencies ‘involve an element of loss to those owed money by the insolvent.’ In addition, the UK’s insolvency regime compares well internationally, World Bank data June 2012 states that the UK’s ‘resolving insolvency ranking’ is the 8th best in the world - better than the US, France and Germany’s rates.
During the course of their work, IPs are exposed to significant financial and personal risk, many costs are driven by regulation and statutory compliance; and creditors always have the power to challenge fees, which are agreed in advance. IP work carries a cost which is comparable to other similarly qualified professionals such as lawyers and accountants.
R3 President Lee Manning concludes:
“The establishment of a single complaints gateway will still not remedy perceived unsecured creditor frustration at IPs or the insolvency process - because this frustration is inextricably tied to the statutory order of priority.
“However, we do look forward to working with the Minister to promote a greater understanding of how the insolvency process works, without damaging what is a world leading insolvency regime.”
For further information please contact:
Will Black, R3 Communications Manager
t: 020 7566 4215 m: 07917 422 485 e: firstname.lastname@example.org
Notes to editors:
World Bank Data on UK ranking link
R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners from all over the UK.
R3 comments on a wide variety of personal and corporate insolvency issues. Please contact the press office, or see www.r3.org.uk for further information.
R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.