Under the proposals, insolvency practitioners (IPs) will have limitations placed on charging by the hour for their work and instead could have to base their fee on a percentage of property dealt with or realised, or as a fixed fee.
This will mean that business and individuals will have a clear idea at the beginning of the insolvency process of how much they will be charged. However how is an IP to judge what work is needed at the start of an investigatory case where all the assets have disappeared with a view to ensuring they are beyond the reach of creditors? What price the winding down of a business, the rescue of jobs or the investigation of wrongdoing?
Also announced is the fact the Insolvency Service will have stronger powers to monitor and regulate practitioners and industry regulators.
New measures, the announcement states “will introduce clear objectives to strengthen the regulation of the insolvency profession and give the Insolvency Service the power to enforce them, including imposing and publicising fines and sanctions”.
In a hard market, with ever increasing red tape, less creditor engagement, and more fraud, misfeasance swiping creditors’ money in the face of reduced public resources to tackle the abuses, it is to be hoped that the “politics of envy” aren’t going to damage the good work IPs do to the benefit of creditors, so often at their own risk and all too frequently at their own expense.
IPs and their lawyers should take care to respond to the consultation, a copy of which can be found here. The consultation will run for six weeks and close on Friday 28th March 2014. Responses can be sent by email to Policy.Unit@insolvency.gsi.gov.uk or in respect of the changes to the fee structure, submitted online at http://www.surveymonkey.com/s/RVC65FW.