2022: The year in insolvency and restructuring

09 January 2023

2022 was a monumental year for R3’s Press, Policy and Public Affairs Team. Alongside our work to promote and defend the profession in parliament and the media, we’ve been working on the profession’s behalf on three high-profile issues: regulatory reform, reforms to Companies House, and a call for evidence on the personal insolvency framework…

Responding to insolvency regulation proposals

At the end of 2021, the Government announced proposed changes to the insolvency regulation framework, with the reforms set to have a significant impact on R3 members, as well as the wider insolvency and restructuring profession.

To understand the profession’s position on the proposals, we worked on a variety of activities, including a joint webinar with the Insolvency Service, a face-to-face roundtable with senior R3 members, meetings with our policy committees, in-person meetings with members across the UK and a member survey to give every R3 member the chance to share their thoughts on the proposals with us.

In early spring, we consolidated all the feedback we received into a consultation response. Our key points focused on the need for a single and independent regulator, greater consistency in regulation between official receivers (ORs) and insolvency practitioners (IPs), and our firm opposition to the introduction of a compensation scheme.

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

As the year continued, we’ve given the profession a voice in the media around the regulation debate, with R3 CEO Caroline Sumner offering her thoughts to ICAEW Insights and R3 President Christina Fitzgerald speaking with Accounting Web.

Reviewing the personal insolvency framework

The Government also published a review of the personal insolvency framework this year. The Call for Evidence posed open-ended questions about the framework’s operation and effectiveness to help inform the Government’s future policy recommendations.

R3 CEO Caroline Sumner welcomed this call for evidence, noting that recent years had seen overarching reforms to the corporate insolvency framework but only individual reforms to the personal framework – something this review would address.

Over the summer, we engaged with our Personal Insolvency Committee and wider members to discuss the review and published a member survey to understand more about how the profession feels the framework could be improved.

Thank you to all the members who worked with us on our response to the call for evidence, which you can read here. We are expecting a full public consultation on the findings and subsequent recommendations in 2023.

Addressing insolvency practitioner fees

In the first quarter of the year, one major project for the Public Affairs team was the development and launch of a new report, ‘Insolvency fees and the cost of regulation: the detail behind the headlines’, which addressed some of the most common misconceptions around insolvency fees.

Insolvency practitioners’ fees are one of the most misunderstood aspects of the profession and this paper helped explain how the fees are charged and illustrate the discrepancies between the figures reported in the press and the actual amount IPs are paid.

The paper was launched on March 7^th and in the following weeks we promoted it to parliamentarians, key industry and business stakeholders, and the media.

Working with the profession to tackle fraud

The insolvency and restructuring profession plays an important, yet not widely recognised, role in tackling fraud. And with the scale of fraud in the UK rapidly increasing, this year we were keen to offer our thoughts on how the corporate governance framework could be improved.

In September, R3 published a new paper ‘Insolvency and the fight against fraud’ which set out our key recommendations for reform of the UK’s anti-fraud framework, focusing on the company dissolution process and Companies House’s automatic strike-off process.

The paper has been sent to more than 200 parliamentarians and stakeholders to promote our proposals, and featured in a number of pieces in the specialist media. Since the papers’ launch, we have further engaged with the Government on fraud legislation as the Economic Crime and Corporate Transparency Bill began its passage through Parliament.

Continuing to campaign on economic crime

In January, conversations around fraud and corporate governance were set in motion when Treasury and Cabinet Office Minister Lord Agnew resigned, after criticising the Government’s failures to address fraud in the UK.

And following the Russia-Ukraine war, the Queen’s Speech in May included the announcement of the Economic Crime and Corporate Transparency Bill, containing measures to tackle economic crime, strengthen national security, and boost small businesses – including plans to reform Companies House.

R3 has long-called for reforms to Companies House and we were pleased to finally see movement on this issue, but believe the Bill could go further to fully close the loopholes easily exploited by fraudsters.

As the Bill began its journey through Parliament, we engaged heavily with MPs to outline our concerns and were pleased to see R3 mentioned in the House of Commons on four occasions, and an amendment tabled by Seema Malhotra MP (Lab), shadow insolvency minister, based on our recommendations.

We expect to see further movement on the Bill early in 2023 and will continue to engage with the Government on the issue and update members on its progress.

R3 in the media

Throughout the year, we took every opportunity to speak on sector insolvency trends, including hospitality, transport, and construction – as well as on high-profile insolvency cases such as fitness chain Digme.

We also appeared on BBC Radio 4’s Money Box talking about personal insolvency processes, Channel 4 news talking about corporate insolvencies, BBC London on a rise in insolvencies in  the LASER region, BBC Spotlight discussing business trends in the South West, and Greatest Hits South Wales radio speaking on insolvency trends in Wales.

Media interest in insolvency statistics remained high, with R3’s comments featuring in 87 national publications throughout the year. Meanwhile, data-led stories on local business trends also picked up coverage across the UK’s regions and nations, including articles on new business start-ups, late payments trends and issues of bad debt. The result was a record-breaking year in terms of media coverage for R3 and our members.

Into 2023…

We will be hitting the ground running in 2023 for what will be an incredibly busy time for the profession. Amongst other priorities, we will continue to ensure the importance and value of the profession is fully understood by parliamentarians. As we get closer to the next General Election and a possible change of government, we will be ramping up our engagement with the main opposition parties. Most importantly, we will continue to work closely with our members to ensure we are up to speed with current and emerging issues facing the profession.