R3 responds to the Future of Insolvency Regulation consultation launch

21 December 2021

Colin Haig, President of insolvency and restructuring trade body R3, comments on the Government’s Future of Insolvency Regulation consultation, which was launched today:

“The publication of the Government’s consultation will be welcomed by many in the profession, who are keen to engage in this long-awaited discussion on the future of the regulatory framework.

“Indeed, the consultation provides an opportunity to deliver a framework that is strong and effective, that is fit for purpose in the longer term, and is better able to carry the confidence of the wider public.

“From our perspective, a successful regulatory framework needs to be fair and proportionate, transparent, effective at addressing shortcomings, efficient in reaching decisions, flexible enough to keep pace with innovation, and, above all, consistent.

“The Government’s proposals appear to have been drawn up with these criteria in mind. But there are still some significant issues with the proposals as they stand that will need to be worked through before any changes can be introduced.

“While improvements can and should be made, there appears to be a lack of evidence around some of the claims the Government has made around the current efficacy of the framework. Crucially, the Government’s preferred option of a single regulator operating within the Insolvency Service raises a major conflict of interest issue.

“We’ve always been clear that we don’t oppose a single regulator in principle, but under these proposals, the Government would set insolvency legislation, regulate insolvency practitioners and then effectively compete with those same insolvency practitioners for work — while not being subject to the same regulation itself. We hope the Government will set out in more detail how it would ensure the genuine independence of this proposed single regulator, as well as a level playing field for the public and private sector parts of the insolvency profession.

“We look forward to discussing these issues with the Government in the coming weeks and months, as we ensure that the profession’s views, concerns and ideas are front and centre of the debate on the future of its regulatory framework.”