PPP update: October 2022

10 November 2022

October saw R3’s Press, Policy and Public Affairs team working on a response to a call-for-evidence on the personal insolvency framework, give the profession a voice in Westminster as the Economic Crime and Corporate Transparency Bill continued its journey through Parliament, as well as responding to continued media interest in the profession and its work …

Second Reading in the House of Commons

In mid-October the Economic Crime and Corporate Transparency Bill began its passage through Parliament with a Second Reading debate in the House of Commons.

Ahead of the debate, our Public Affairs team briefed MPs on our recommendations on reforming Companies House’s strike-off process and making the restoration of a company an administrative process.

In the debate, we were pleased to see R3 mentioned by Kate Green MP (Labour) who went into detail about our concerns regarding the current automatic strike-off process and cited our recommendations directly in her speech, noting that:

“R3 has suggested tightening up the compulsory strike-off process by automatically placing a company that fails to comply with its obligations into liquidation, with the process overseen by the Government’s official receiver. That would allow for earlier investigation into the conduct of directors and for the earlier recovery of misappropriated company assets for the benefit of all the company’s creditors. Directors could be made liable for the costs of liquidation, which would be an additional deterrent to misconduct”.

She also said that:“R3 has proposed a system of administrative restoration in all cases, which could be triggered by a company director or a creditor once suitable requirements have been met, such as producing evidence of an unpaid debt or a commitment to petition for the winding-up of the restored company.”

Margaret Ferrier MP also quoted directly from our briefing, noting that that companies are often struck-off the register before they can be assessed for fraud and asking: “Will the Minister commit to putting such companies through an insolvency process to ensure that returns to creditors can be made?”

 She also raised our concerns around resourcing for Companies House’s Registrar’s new power to proactively query misinformation on the register.

In the coming weeks, MPs will debate the Bill in much further detail at Committee Stage and we will keep members updated on these discussions, as well as ensuring the profession’s views and concerns are heard at every possible opportunity.

Responding to the personal insolvency framework review

In early July, the Government issued a call for evidence on a review of the personal insolvency framework. Having called for this review for some time, we welcomed the opportunity to respond to this consultation and submitted our 20-page response at the end of October.

While the current three statutory processes offer a good range of solutions, many indebted individuals do not enter the correct solution for their circumstances, often due to lack of access to qualified debt advice and barriers around the cost of entry. Our consultation response outlines 5 key recommendations to dealing with these barriers and improving the framework so that it’s better fit for purpose.

In our response, we suggest adjusting the cost and duration of the bankruptcy process, introducing a single online automated gateway for indebted individuals to enter their information and generate a suggested solution to their circumstances, expanding the debt advice exemption and allowing greater movement between personal insolvency solutions.

We would like to thank all the R3 members who contributed to the drafting of this response, which you can read in full here.

R3 in the media

Our insights on the quarterly and monthly insolvency statistics generated a wide range of coverage throughout October, with our comments on the Q3 England and Wales insolvency statistics being picked up by more than 180 media outlets including ITV, the Times, ThisIsMoney, as well as leading to an interview with Channel Four News.

The Q2 insolvency statistics for Scotland also generated a number of articles including the Herald, the Independent and the Scotsman while R3 President Christina Fitzgerald’s comments on the September insolvency figures for England and Wales were picked up by Accounting Web, Business News Wales and North West Connected, to name a few.

In October, news that R3 with the Insolvency Service announced the first cohort of Diversity and Inclusion Champions was covered by a number of trade publications, while regional media interest in local business trends also remained high last month. Coverage around this issue included a story on a rise in late payments in Northern Ireland resulting in an interview with the Belfast Telegraph while our comments on a rise in insolvency-related activity in the South West featured on BBC Spotlight.