Shaping the future of insolvency: Insights from R3’s Past Presidents

Voices around the table highlighted that this has led to a sense of instability in the profession - raising concerns about the sustainability of insolvency careers and the future of the regulatory framework.

IPs seek a stable, robust and transparent system of regulation that they can understand and trust. Without this stability, there is a risk of experienced IPs exiting the profession and a reluctance among younger people to enter it.

Attendees noted that greater communication is needed between the private and public sectors, to share ideas, to listen to each other’s concerns and to better understand how both sectors can draw on each other’s strengths to enhance the profession and its work.

On the topic of instability, conversations also turned to the threat of an impending compensation scheme for the insolvency and restructuring profession. Compensation schemes are common in many sectors, but for insolvency, where emotions often run high and it’s almost impossible to please everybody, a scheme of this kind could bring in a tidal wave of claims that would potentially threaten the future of insolvency firms, particularly the smaller practices.

The group also echoed concerns of the effect that the proposals for a compensation scheme could be having on recruitment and retention, driving out existing IPs and deterring budding talents from joining the profession.

The conversation also didn't shy away from critiquing regulation enforcement. Despite the professions stringent regulations, which aim to uphold the highest standards of integrity and professionalism, their effectiveness is compromised when enforcement measures lag behind. As a result, attendees noted that this slow enforcement leaves IPs vulnerable to the actions of a few bad actors who tarnish the reputation of the profession as a whole.

The examination process

Conversations also turned to the Joint Insolvency Examination Board (JIEB) exams, sparking a discussion about the efficiency of the exams and whether they could be rethought to better align with the evolving demands of the profession.

All attendees highlighted the numerous issues with the current exam format questioning whether they were the most effective way of identifying those who would make good IPs, ranging from the age and experience profile of candidates to the lack of any practical scenarios to the assessment process.

The average age of a qualifying IP is 33. At this age, professionals often have commitments outside of work, such as young children, which can hinder their ability to dedicate time to studying for exams. It was also highlighted that people over the age of 30 may be out of practice with formal written exams.

With many professionals taking the exams later in their careers, after already gaining significant practical experience in insolvency, this often means that there is a financial implication for their employer when it comes to giving them time off to study for them, they, which makes allocating sufficient time and energy to exam preparation a challenge.

In response to these issues, participants suggested a review of, and possible reforms to the examination process. Suggestions included ensuring the exams are as relevant as possible to the work the profession carries out, introducing practical components, and exploring alternative assessment formats such as peer interviews.

Engaging with members

The round table offered a unique chance to discuss the opportunities and challenges each president faced during their leadership. It was fantastic to hear feedback that over the years, the dialogue around membership has shifted and members are largely aware of all the great benefits that come being a member of R3.

However, it was noted that there is greater need to amplify R3's lobbying efforts and the support provided to members by its Public Affairs team. R3's Public Affairs team plays a pivotal role - setting up briefings with MPs, peers, and other stakeholders, remaining vigilant and responding quickly to parliamentary changes and legislative proposals, and gathering insights from members to act as one unified voice of the insolvency and restructuring profession in Parliament and the devolved nations.

With the next General Election on its way, Past Presidents round the table discussed the importance of directing these lobbying efforts, not only towards the current Government, but also to the Shadow Cabinet and across all corners of the political spectrum. Doing so will ensure that the insolvency and restructuring profession's interests are firmly represented and its voice is heard, regardless of the shape of the political landscape in the year ahead – and beyond.

Thank you to everyone who took part in the round table, and to Addleshaw Goddard for hosting the discussion.