Since the Insolvency Act 1986 became law, the regulation of the insolvency profession was directed at individual licensed insolvency practitioners – it is they and not who they may work for that were regulated. Over the years, we have seen a number of organisations set up that provide insolvency / turnaround and related services and to provide those services employ licensed insolvency practitioners, often at a junior or middle management level, to carry out the work. When things go wrong or the work is not carried out to an acceptable level, it is the individual licensed insolvency practitioners who face the wrath of the regulators and not the firms that they work for opening up the opportunity for those firms to simply recruit other licensed insolvency practitioners to take their place. This practice or behaviour has not been restricted to certain sizes of firms. Both large and small organisations run by non licensed insolvency practitioners, free from the fear of losing their insolvency licence, have perhaps used to their advantage this lacuna in the regulatory framework of the insolvency profession.
In September 2023, the Government announced that it will, as soon as parliamentary time become available, introduce legislation to ensure that firms as well as individual licensed insolvency practitioners will be subject to the insolvency regulatory framework.
Interestingly, the Government will not initially introduce a single regulator for the insolvency profession, but will continue with the existing framework of the four recognised professional bodies (the IPA as well as the ICAEW and the Scottish and Irish equivalents) to oversee that regulation. However, if it becomes necessary, power will be given to the Government to introduce such a single regulator in the future.
Redman Nichols Butler is a firm of licensed insolvency practitioners wholly run by and owned by licensed insolvency practitioners licensed by the IPA.