Government proposals to reduce Red Tape for insolvency profession welcome, says R3
Liz Bingham, president of R3, the insolvency trade body, comments on the Insolvency Service’s ‘Red Tape Challenge’ proposals which aim to reduce the regulatory burden on England & Wales’ insolvency regime:
“At first glance, the Government’s proposals are welcome. They are simple, common sense steps that remove several unnecessary hurdles for insolvency practitioners (IPs) and businesses to contend with.”
“Introducing more electronic reporting and simplifying statutory reporting steps are long overdue.”
“We are very pleased to see that so many of our own proposals, in particular, those that help boost the rescue culture, have made it into the Government’s plans. The proposals will allow IPs to spend more time rescuing businesses instead of form processing”
“We are still awaiting the full detail of how the Government is proposing to make their changes, but what we have heard so far is a good start.”
The Government is proposing to:
- Allow IPs to communicate with creditors electronically, instead of by letter;
- Remove the requirements for IPs to obtain court orders for certain actions (e.g. extending administrations, posting information on websites);
- Reduce record keeping requirements by IPs which are only used for internal purposes. Introduce electronic forms for IPs to report director misconduct ensuring timely action is brought against them thereby providing a higher level of protection to the business community and public;
- Allow IPs to rely on the insolvent’s records when paying small claims, reducing the need for creditors to complete claim forms;
- Reduce costs by removing the requirement to pay out small dividends and instead using the money for the wider benefit of creditors.
In 2012, the insolvency profession rescued 6,100 businesses and saved approximately 750,000 jobs (according to a ComRes/R3 survey). The UK is currently ranked in the Top-10 most effective insolvency regimes in the world by the World Bank.