R3 Press, Policy and Public Affairs Update – September 2019

27 September 2019

Parliamentary engagement

Despite the significant parliamentary turmoil over recent weeks, R3 has been working hard to secure meetings with MPs and Peers to highlight member views and concerns on the key legislative and regulatory issues affecting the insolvency and restructuring profession.

Following the end of the summer parliamentary recess, R3 has already met one Peer to discuss the return of Crown Preference and has a number of planned meetings and discussions with parliamentarians in the weeks and months ahead – assuming, of course, that a general election doesn’t get in the way.

Crown Preference

One of the key areas of work for the Press, Policy and Public Affairs team over the last year has been challenging the Government’s proposal to reintroduce Crown Preference, and the last month has been no different. The team coordinated ten other business and insolvency stakeholders to sign a joint letter to the Chancellor, calling on him to cancel or at least mitigate the policy; the signatories were:

• Alternative Credit Council
• ACCA
• British Property Federation
• British Private Equity and Venture Capital Association
• Chartered Institute of Credit Management
• City of London Law Society
• ICAEW
• ICAS
• Insolvency Practitioners Association
• Professor Peter Walton, Professor of Insolvency Law, University of Wolverhampton

We were delighted that the letter, which you can read here, was then covered by the Times. For those of you with a subscription, you can read the article here. We hope that demonstrating the breadth of opposition to the policy will put pressure on the Chancellor to reconsider.

Policy

While the recent political situation has meant that parliamentary attention has been focussed on the ‘bigger picture’, officials have been continuing their work on the detail of various policy issues affecting the profession. We’ve been working hard to ensure that member views on these issues are taken on board as this work continues.

For example, R3 has responded to the Treasury’s consultation on the draft Finance Bill 2019-20 legislation which will put the Government’s proposals to reintroduce Crown Preference, as well proposals to make directors personally liable for corporate tax debts where ‘phoenixism’ is suspected, on to the statute book. While R3 understands the issue which HMRC is seeking to address, we are concerned that, without strict guidance to accompany the legislation, there is a risk that it may be applied much more widely than originally intended.

R3 has also secured meetings with HMRC to discuss our response in more detail in the next few weeks.

We have also responded to the Government’s ‘Breathing Space’ draft legislation, which will introduce a short two-month ‘breathing space’ for indebted individuals, to allow them to seek advice on debts while protected from creditors. Although this response focussed on the technicalities of the legislation, we were pleased that the Government has listened to our earlier recommendation that the length of the Breathing Space shouldn’t be as long as the six or twelve months suggested by some lobby groups.

Ethics in insolvency and restructuring

The last two years have seen unprecedented press and political discussion of the role played by financial and professional services in the economy and in society. The work and ethical standards of the insolvency and restructuring profession have been an inevitable part of this discussion.

In R3’s meetings with journalists, politicians and stakeholders, it has become increasingly common to hear questions about how conflicts of interest are managed by the profession and how ethical standards are upheld.

To support our work in addressing these questions, R3 is looking at whether the ethical framework for the profession is effective, and where, if necessary, improvements can be made. Following a members’ survey on the issue earlier in the year the team will be hosting a roundtable discussion for senior members to share their thoughts on the effectiveness of the ethical framework for insolvency and restructuring in the UK. We then hope to publish a policy paper summarising our findings.

Review of insolvency practitioner regulation

In July, the Government published a Call for Evidence on the regulation of insolvency practitioners. The aim of this review is to seek views on the effectiveness of the existing regulatory framework, and to establish whether or not the Government should use a soon-to-expire power to introduce a new regulatory framework for the profession.

R3 will shortly be submitting a response to the Call for Evidence, based on the response from our members’ survey on the issue as well as from feedback from our policy committees. Throughout this process we will be engaging with the Government to ensure that, regardless of how the regulatory framework is structured, insolvency practitioner regulation is fair and proportionate, transparent, effective at addressing shortcomings, efficient in reaching decisions, flexible enough to keep pace with innovation, and consistent.

Media

September has been a busy month for R3’s Press Team. The Companies House Consultation and Draft Finance Bill have meant that the team has been busy briefing journalists on the impact these issues will have on business and the economy.

In addition to The Times coverage, the joint stakeholder letter was covered by Economia, Accountancy Daily and CCR Magazine (among others), while R3 Technical Director Caroline Sumner was quoted in a Daily Mail article on the announcement that HMRC will be able to recover payment protection insurance compensation from people who have entered bankruptcy. R3 president Duncan Swift was quoted in an article in The Times about the use of the Pre-Pack Pool, and was interviewed by the BBC News Channel and BBC Radio Solent following the news that Thomas Cook was to enter liquidation. Duncan was also quoted by the BBC News and Sky News websites on Government plans to change the rules in airline insolvencies.

R3’s views on the Companies House consultation were also featured in local papers in Hampshire, Yorkshire, Edinburgh and Wolverhampton, as well as a number of trade titles.