Government insolvency regulation announcement: R3 response

12 September 2023

Christina Fitzgerald, Immediate Past President of R3, the UK’s insolvency and restructuring trade body, and a Director at Isadore Goldman, responds to the Government’s announcement on the future of insolvency regulation:

“Today’s announcement is welcomed and we are pleased that the Government has listened to the profession’s concerns about the creation of a single Government regulator. The proposals outlined seek to evolve our framework in a way which we hope will preserve the best of our current approach, while taking into account the changes in the demands on the framework and the profession over the last 40 years.

“We are also pleased that the Minister has recognised the quality of the work done by members of the profession, who every year rescue thousands of businesses, save tens of thousands of jobs and help return billions of pounds to the economy.

“Turning to the details of the announcement, the introduction of firm regulation should improve professional standards and has been supported by the wider profession. The decision to reform the bonding regime is also welcomed as this has been needed for a number of years. However, we urgently need more detail on how these changes will work in practice, and hope their introduction won’t affect the profession’s ability to support financially distressed businesses and individuals.

“It is important that any regulatory changes do not impose onerous burdens on the profession and such regulatory changes should be introduced in such a way so that they support diversity, choice and a breadth of provision within the market.

“We understand the rationale behind the compensation scheme, but have significant concerns it could lead to a wave of unsubstantiated claims and the creation of a PPI-style claims management industry, which could place an unwanted and potentially unmanageable burden on the smaller practices within the profession, have consequences for the profession’s ability to deliver for clients and creditors, and potentially undermine the UK’s national and international reputation for having an effective insolvency framework and profession.

“We look forward to seeing the full details of the proposed changes and working with the Government to ensure that the new regime helps further improve public confidence in the profession and the work it does every year to rescue businesses, save jobs, return money to the economy, investigate director misconduct and help people return to a more secure financial place.”