Corporate report

IPA Monitoring Report: visit 21st – 25th June 2021

Published 11 February 2022

Summary

This report presents the findings of the Insolvency Service’s monitoring visit to the IPA in June 2021. The visit also included examination of progress in relation to recommendations made by the Insolvency Service between 27-29th January 2020.

Welcome innovations and improvements have been made by the IPA, especially in relation to monitoring.

In response to previous findings and recommendations, we found good progress had been made by the IPA to ensure that the complaints and monitoring teams were working collaboratively. This has contributed to the significant reduction in delays previously identified in progression of complaints, and in relation to follow up for monitoring visits.

The IPA has also employed new staff all of whom have relevant qualifications and experience in insolvency.

The IPA is in the process of fully implementing some previous recommendations; and this report makes further recommendations in relation to complaints and committee outcomes.

The recommendations set out in this report are based on the evidence reviewed at this visit, and subsequent observation of the Regulation and Conduct Committee (RCC).

Context

The Insolvency Service has overall responsibility on behalf of the Secretary of State for ensuring that the activities of the Recognised Professional Bodies (RPBs) (which are responsible for authorising and licencing Insolvency Practitioners) are compatible with the regulatory objectives set out in Part XIII Insolvency Act 1986, insofar as is reasonably practicable; and which the RPB considers most appropriate for the purpose of meeting those objectives.

Amongst other things, the objectives include having a system of regulating Insolvency Practitioners that secures fair treatment and consistent outcomes; that encourages the profession to provide high-quality services at a fair and reasonable cost; that encourages IPs to act transparently and with integrity and promote the maximisation of returns to creditors; and protects and promotes the public interest.

As part of its statutory oversight activities, the Insolvency Service undertakes monitoring visits to the RPBs.

The Insolvency Practitioners’ Association (IPA) is an RPB that authorises and regulates Insolvency Practitioners as defined under s391 Insolvency Act 1986.

The IPA is the second largest RPB by the number of IPs regulated and the largest by the number of cases. On 1 January 2021, the IPA licenced 615 practitioners of whom 522 were authorised to take insolvency appointments; and its regulated population covers 41.5% of the Insolvency Practitioner market, including several practitioners working at the UK’s largest IVA providers.

Scope of the visit

The Insolvency Service carried out a monitoring visit to the IPA between 21st and 25th June 2021. The visit was undertaken remotely using video conferencing and file sharing software. The Insolvency Service agreed the scope of the visit in advance, which included a review of all regulatory functions as follows:

• An assessment of progress against the recommendations from the 2020 report (published September 2020) following our monitoring visits in 2018 and 2019.
• Monitoring of Insolvency Practitioners, including those who work in the volume IVA sector.
• Complaints’ handling.
• The Regulatory and Conduct Committee (RCC).
• Authorisations of Insolvency Practitioners.
• Bonding by Insolvency Practitioners.
• Risk profiling.
• Use of Advisory Notices. And
• IPA’s approach to poor advertisement by lead generators.

Annexes to this report include:

• a schedule of the pre visit information requested; and
• a schedule of recommendations with responses from the IPA.

Progress against previous recommendations

The following recommendations were made following a monitoring visit to the IPA which took place between January and May 2020 and reported in September 2020.

The IPA has made progress against many of these, particularly the development of risk profiling and in reviewing complaint files to ensure timely updates to all parties.

Recommendation

The IPA should ensure that full reasons for decisions of the RCC are always recorded.

Progress

The minutes have been developed to include more information than those previously reviewed, however there remains some further work to be done, particularly to make clear the rationale for a sanction including in those cases where consideration must be given to whether the Insolvency Practitioner remains a fit and proper person to hold a licence, and in documenting application of the Common Sanctions Guidance (CSG) as a factor in arriving at a fair outcome.

We are aware of forthcoming changes planned by IPA on this.

Recommendation

To avoid unnecessary delays, the secretariat should ensure that, in addition to the relevant report at the meeting, all the relevant information about the practitioner can be made available to the committee (including, recent monitoring reports, advisory notices, sanctions and intelligence). Where appropriate, this information can be put to the committee after a prima facie case is found.

Progress

Implemented.

At the observed RCC, following the finding of a prima facie case on all allegations, the RO had precedent and regulatory history information available.

Recommendation

The secretariat should consider further training for the committee on the different types of decision it may be expected to make, including in relation to allegations attached to monitoring visit reports.

Progress

Members of RCC now receive yearly training from IPA. At one of the observations of the RCC, members needed guidance on the decisions they were being asked to make and next steps which did show a degree of lack of understanding and confidence.

Recommendation

Pending introduction of its new IT system, the IPA should ensure that all correspondence is recorded and replied to within its published timeframes.

Progress

The IPA has made significant progress and has introduced a new IT programme, Microsoft Planner, which has ensured greater cross-team working and an ability to track progress of complaints.

Recommendation

The IPA should undertake a review of all complaint files to ensure that they are up to date.

Progress

Implemented.

This was completed after the January 2020 visit.

Recommendation

The IPA should ensure it substantively contacts all parties to a complaint at least quarterly, that all direct contact with the IPA is responded to in accordance with its published time frame, and that timeliness is monitored by the senior regulation officers who manage the complaints teams.

Progress

There were fewer cases at this visit which evidenced delays in keeping all parties appraised of progress, however there were still some examples of failure to provide quarterly updates.

Recommendation

The IPA should [explore] fully all [matters] put to the practitioner, in order to be able to evidence why an allegation was not put to the RCC for consideration.

Progress

IPA have amended their RCC reports and more information is now provided to the committee. No cases were sampled on this visit where there were concerns that not all of the matters raised by the informant were reviewed.

Recommendation

The IPA should consider how the advisory notices should feed into the complaints process for the RCC, including whether details of previous notices (for example, relating to a similar breach) should be noted in the complaint report and whether training needs to be provided to explain their significance to members of that committee.

Progress

The advisory notices are now being used more regularly as a tool to educate and warn practitioners of the IPA’s expectations as their regulator.

Recommendation

The IPA should use all tools available to accurately risk profile practitioners into appropriate categories so that resource can be targeted to the highest risk practitioners.

Progress

Risk profiling has been further developed, with increased metrics and additional criteria to place practitioners in one of five categories. This feeds through into the amount of time between scheduled routine visits.

Recommendation

The IPA should report all advisory notices to the Insolvency Service in the same way it does with any other disciplinary or regulatory action.

Progress

This had not been actioned by the IPA however the Insolvency Service is now receiving notifications.

Recommendation

When the IPA inspectors listen to a SIP 3.1 advice call, they should consider whether there is evidence that an individual voluntary arrangement is an appropriate solution for the debtor and that it strikes a fair balance between the interests of the debtor and creditors (para 5 of SIP 3.1).

Progress

The IPA has employed three call reviewers in addition to the dedicated 3 inspectors, allowing targeted focus on this aspect of the IVA process.

Recommendation

Allegations put to the RCC for breaches of SIP 3.1 should consider requiring the Insolvency Practitioner to restore the debtor’s position where there is evidence that an IVA was not an appropriate solution and did not strike a fair balance between the interests of the debtor and creditors.

Progress

Whilst we did not see any VPR cases on this visit where this scenario occurred, we did see evidence in a non-VPR IVA case of the sample selected in which the IPA considered whether it could order restoration of the position of the consumer because the IVA may not have been the most appropriate solution. This was not, however, ordered.

Monitoring of Insolvency Practitioners

The files sampled during our visit represented a mix of monitoring inspections to volume IVA providers, mid-size firms and sole practitioners across a mix of full and targeted visits. In each case the IPA provided electronic copies of all documents relating to the visit strategy, risk profiling, queries raised by the inspector with the practitioner whilst onsite, and file inspection reports.

The monitoring team comprised five inspectors with a range of experience in practice (three of whom have joined the IPA since early 2020 following previous departures); and a manager who took up post in September 2020. In addition, the VPR-monitoring team includes three inspectors, including one trainee; three part-time call reviewers; and a part-time member of administrative staff. All are overseen by the Chief Inspector.

During the period 1 May 2020 to 20 April 2021 the IPA conducted monitoring visits to 94 Insolvency Practitioners, 18% of its appointment-taking population, and undertook desktop monitoring on a further 9 practitioners. Fourteen inspections were ongoing at the time of our visit. These figures exclude monitoring of the volume provider market, which is covered by the IPA’s Volume Provider Regulation scheme and is covered separately below.

Risk Profiling

As part of the risk profiling process, the IPA assesses each practitioner against several criteria to determine a risk category, which is then monitored and updated from the IPA’s own intelligence by a member of the inspection team on a monthly basis. Since the last monitoring visit, the IPA has introduced additional criteria to refine this process. Factors considered include, but are not limited to:

• Previous complaints
• Disciplinary record
• Advisory notices
• Regulatory findings
• Practice profile – for example, size, geography, experience, case profile and source
• Anti-money laundering (AML) risks

The IPA has also expanded its risk categories from three to five: low, medium-low, medium, medium-high and high. The frequency of monitoring visits is planned according to these categories, ranging from annual visits for a high-risk practitioner to every 6 years for a low-risk practitioner, supplemented by self-certification in the intervening period and ongoing analysis of risk and compliance (ARC). As of 30 April 2021, 71 practitioners were categorised as high risk (down from 95 at the January 2020 visit).

The IPA acts as AML supervisor for approximately 180 firms and has a separate risk register for this purpose. The IPA also utilises its discussions with the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) to feed into its general Insolvency Practitioner monitoring risk profile. Whilst all inspection visits cover AML considerations as standard, specific AML monitoring will be undertaken either as a standalone activity or be incorporated into the IPA’s Insolvency Practitioner monitoring visits.

Overall, the IPA reports it has found that better risk profiling has benefitted its teams in allowing better highlighting of risk and more appropriate application of resource, including that they are able to be more focussed by targeting smaller case samples.

The development of the risk profile to include more risk matrix criteria and expand the categories of practitioners is welcomed. The IPA has stated that further work will be undertaken to ensure the profile is utilised to its full potential, and fully to use the expertise and knowledge of inspectors when inputting subjective responses to matrix questions.

Inspector engagement with Insolvency Practitioners and visit planning

For newly authorised practitioners, the IPA reviews bordereau submissions[1] to determine when IP appointments commence, and it plans visits from this point rather than relying on the date of authorisation to schedule initial inspections. A member of the monitoring team will also call a new practitioner to gauge what structures they have in place, the type of appointments they are taking/planning to take, and what support they might be receiving, for example from other practitioners at a firm.

The IPA has also implemented a point of contact for vulnerable Insolvency Practitioners, alongside drafting its own vulnerable Insolvency Practitioner policy, to offer support to Insolvency Practitioners who are experiencing their own difficulties, or who are dealing with clients with vulnerabilities.

Visits are scheduled up to two quarters in advance, with flexibility built in for any follow up or ad hoc visits that may be required, for example as a result of RCC findings. A pre-visit questionnaire (PVQ) is issued for completion by the practitioner, which is reviewed alongside the IPA’s own intelligence, where available. This information informs the visit strategy and sample of cases.

We welcome the introduction of these procedures and will monitor progress of their use and impact.

Inspection reports and post visit procedures

An inspection report is produced after all visits. It records major and minor findings, any advisory notices issued, and other non-mandatory recommendations. The Insolvency Practitioner is invited to respond to the points made within 15 working days of issue, and any follow up actions can be recorded by the inspector upon receipt.

Due to the Covid-19 pandemic, most visits have been undertaken remotely, using file sharing systems such as Egress and SharePoint to access casefiles.

The IPA had already started to move towards undertaking some visits remotely, so the health restrictions during 2020 accelerated impetus to move to this way of working. The IPA has found that practitioners generally have engaged well with the new processes. Where more serious concerns or other issues are discovered, teams are remaining flexible, and will undertake on-site visits or use a hybrid approach.

The hybrid approach to inspections has proved to be a positive development for the IPA and is expected to give productivity gains as well as enabling the IPA to develop a more flexible plan of inspections more tailored to practitioners’ practice and risk profile.

Volume Provider Scheme (VPR) monitoring

Insolvency practitioners registered for the IPA’s VPR scheme are subject to continuous monitoring, including one full review and up to four focussed reviews per year, with monthly meetings for individual member firms and quarterly meetings across the member group.

During the period 1 May 2020 to 30 April 2021 the IPA completed 17 monitoring visits to firms registered with its VPR scheme, with a further 15 visits ongoing.

The IPA has been focussing on potential mis-selling of IVAs and has been using desktop monitoring, for example looking at online customer reviews, to look at cases and identify areas for focus during call reviews. The IPA engages with creditor representatives, credit unions and the wider debt advice market to gather intelligence, such as changes in disbursements and mass variations. As a result of this the IPA has been able to take swift action when necessary.

To support its volume provider scheme monitoring, the IPA has recruited a trainee inspector, working alongside its two established VPR inspectors, and has also employed three part-time call reviewers who focus on the advice being provided to consumers. As a result, the IPA has increased its call-review capacity to 800 per year (from 300) as part of its commitment to review 1% of advice calls. This new resource has enabled inspectors to focus on issues such as fees, payment of dividends, and on identifying procedural/SIP breaches. This has better enabled the issuing of advisory notices.

The IPA has also recently recruited an administrative member of staff to examine the data and information provided by the volume providers as part of their monthly returns, including annual progress reports and income and expenditure reviews. As a result, monthly statistics are produced that help with scheduling of visits and aids the IPA in early trend detection and wider matters. (For example, it was able to draw on data when responding to the recent call for evidence on the proposed changes to the monetary limits for Debt Relief Orders, as it was able to identify disposable income levels for IVA consumers.)

The IPA monitors online review sites, such as Trustpilot, to look at cases and identify areas of concern enabling focus on more serious issues when undertaking call reviews. The VPR team also works with other regulatory bodies to ensure they have the full intelligence picture in respect of the largest of the volume provider firms.

Since mid- 2020 the IPA’s two senior VPR inspectors have been given full access to some of the IVA providers’ systems, which has facilitated real time access and continuity of monitoring despite the Covid-19 pandemic.

Following the introduction of the new insolvency Code of Ethics and closer scrutiny of advertisement practices, the IPA informed their practitioners that they needed to ensure their websites were compliant with Advertising Standards Agency (ASA) and Financial Conduct Agency (FCA) regulations. Where subsequent issues have been discovered, regulatory action has been taken, and/or referrals have been made to other RPBs, the ASA and the FCA. Issues addressed have included the reasonableness of claims of expected percentage debt write-off, claims relating to government backing, failure to be explicit that the offering is an IVA, and sites not listing all practitioners at a firm.

More recently the IPA has also started to issue advisory notices to practitioners in breach of the guidance, giving them 7 days to rectify the position. The majority have complied with the notices.

The IPA inspection team also report that the revised Code of Ethics has assisted in their approach, enabling early escalation of complaints.

The development and expansion of the volume provider scheme is particularly welcomed. There remains further work to do to ensure that the reports drafted by inspectors are actioned by the RCC. The number of advisory notices and sanctions in this sector remains a significant concern, although the increase in those being handed out by RCC provides confirmation that the inspectors are identifying and sufficiently setting out concerns about practices to the RCC. The conduct and behaviour of VPR members remains of concern and the impact of the scheme on that will remain of interest.

Advisory notices

The IPA are making wider use of advisory notices, including issuing notices to individual Insolvency Practitioners.

Where an advisory notice is issued, a clear timescale is given for improvements to be made and where appropriate allowing for matters to be escalated and reported to the RCC in a timely fashion where full compliance is not achieved. Advisory notices are considered as part of risk assessments conducted to inform the frequency of monitoring for example.

At present advisory notices can only be issued by inspectors following monitoring visits, however, it is proposed that all IPA staff will be able to issue advisory notices in future.

All advisory notices are submitted to the IPA’s Regulatory and Conduct Committee for consideration.

The issuing of advisory notices is welcomed, along with their consideration by the relevant committee. Their use appears to be expanding and their development and use is testament to the IPA’s identification of the need for a method to formally advise a practitioner to change their behaviour or technical approach. It was previously agreed that the IPA will share these with the Insolvency Service in order to track the expansion of the process and monitor whether any more significant sanctions subsequently resulted in a failure to follow that notice by any practitioners.

Recommendation

The IPA should provide notification to IPRS of all sanctions and advisory notices on a monthly basis.

Case reviews and detailed findings

A total of 34 inspections relating to 49 Insolvency Practitioners were reviewed. These included a mix of VPR and non-VPR cases, full reviews, focussed reviews, and initial visits.

It was clear that where some visits had been postponed due to the Covid-19 pandemic, timely risk assessments were conducted, and subsequent arrangements were made.

There was evidence that inspections demonstrated good use of standard forms to plan, gather information and record the outcomes of inspection visits. There were examples of strategy documents having been used to good effect to explain in detail why a full visit was required but not yet feasible; and of the strategy document explaining the rationale for case selection.

The use of the inspection report document to invite comments from the Insolvency Practitioner in response to findings, and the annotation of this in some cases by the inspector means there is a clear trail of decisions and actions, both by the Insolvency Practitioner and for the inspector at a future date.

The use of the standard forms also ensured that AML matters and any training needs were clearly highlighted where appropriate.

Advisory notices are used as a tool to educate practitioners who have fallen short of the standard expected by IPA. Generally advisory notices were used on cases appropriately, based on the level of breach identified, however there was one example where a report to RCC may have been warranted.

The work of the monitoring team remains a high priority for the IPA and this is evident in the continued work to improve the efficiency of the team. We welcome work by the IPA to continue and extend its good practice, and to ensure that the monitoring team works closely with the complaints team; and to ensure that high quality monitoring remains achievable in the light of changing risk assessments.

Complaints

Procedure for complaint handling

The IPA received 222 complaints in 2020/21 from the Insolvency Practitioner Complaints Gateway. The complaints are received and acknowledged by the IPA immediately. The complaints are assessed by the IPA’s Head of Process to determine the facts and level of complexity. The case is then allocated to one of five Regulation Officers (ROs) for investigation.

The IPA has recruited 2 new ROs and at the time of the visit a third was to be starting soon. All have professional qualifications and practise experience. Two of these posts are new, one is a replacement for an RO who had left the IPA.

The IPA now refers to complainants as informants: this is a cultural shift with an emphasis now on the informant providing information which the IPA will consider and investigate to establish whether the IP may have become liable to disciplinary action, and whether misconduct may have taken place.

ROs have a mixed portfolio of complaints including cases with simple and more complex facts and a variety of types of insolvencies. If fully utilised, each RO has approximately 20-25 cases.

Correspondence is sent to the informant to acknowledge receipt of the complaint, introduce the RO and provide their contact details. The informant is encouraged to contact the assigned RO directly and information about the complaints process is provided to them at this point. The IPA has updated the introductory template letter; this now includes more information and better manages the expectations of the informant.

Once an investigation has commenced, the RO writes to the Insolvency Practitioner to set out the complaint and ask for comment. If there are specific questions, these are included and there is usually a period where there is an exchange of information to determine the facts.

If the RO, having considered the information, is of the opinion there is a case for the Insolvency Practitioner to answer they will draft allegations which will be put to the Insolvency Practitioner.

The Insolvency Practitioner has the right to provide representations in answer to those allegations and then a report is drafted by the RO explaining the legal and factual issues raised, the arguments advanced by both informant and IP, the RO’s assessment of the case and including any relevant evidence. Copies of any evidence and any representations are annexed.

New-style reports on allegations (provided to the Regulatory and Conduct Committee) were introduced in 2020. They are shorter and more succinct, and have clear information on the position of the informant and Insolvency Practitioner. The ROs include an extract from the Common Sanctions Guidance (CSG) in the report and, if a prima facie case is found, they have precedents and regulatory history available for the RCC on request. The RCC are asked to take all relevant regulatory history into account. All reports drafted by ROs are reviewed and approved by both the Head of Process and Head of Committee Operations.

Where a RO considers there is no liability to disciplinary action for the Insolvency Practitioner, informants have a right to request that decision is reviewed by the RCC under rule 2.3 of the IPA’s Conduct Rules 2019. If such a review is requested, the RO will draft a report for the RCC. There has been a reduction in the number of Rule 2.3 reports since the last visit which suggests that informants are generally satisfied with the outcomes that have been communicated by the ROs and have not sought to invoke this process as regularly.

We welcome the introduction of changes designed to move the culture to more of one which is aligned to the individual providing the IPA, as the regulator, information to investigate. However, the IPA must remain mindful that the informant might not always be able to prove the suggested misconduct and will not have detailed knowledge of the Insolvency regime. As a result, the IPA will need to ensure that they make relevant enquiries on both the issues raised by the informant and any linked or surrounding issues to satisfy themselves if a case may be closed without further action.

Case reviews and detailed findings

During the monitoring visit, we reviewed 24 complaints files at a range of different stages, including those open and under investigation, those closed, and those over 12 months old. The sample was a randomised selection. The review of these cases was focused on progress since the last monitoring visit in 2020.

In most cases reviewed, progress had been made, informants were kept informed of progress in a timely manner, and Insolvency Practitioners themselves were cooperative in the process.

We did observe some cases where there had been significant delays, some of which appeared to be caused by Insolvency Practitioners’ requests for extensions (including some made close to deadlines). Multiple requests for extensions were evident on one case reviewed.

It is noted that some complaints cases are particularly complex and take time to process. The IS holds regular meetings with the IPA to discuss the progression of complaints, including complaints over 12 months old.

The IPA has spent considerable time reducing delays in complaint cases and in progression after RCC consideration. This is welcomed. Whereas significant numbers of cases were identified at our previous visit where responses to the informant and/or the practitioner had not been actioned, cases now appear to be reviewed more regularly, with generally good levels of communication. In a small number of cases, delays had occurred, and lessons learned from these instances have been identified and applied. It does appear to remain possible, however, for individuals to delay the consideration of complaints against them by making late or repeated requests for extensions.

Recommendation

The IPA should consider drafting a policy which sets out how staff should set deadlines for both Insolvency Practitioners and informants to respond to requests for extensions and set reasonable expectations with their members on how such requests would be dealt with. This will remain relevant to changes the IPA intends to make to its rules in respect of Regulation Officers having a more active role in the sanctioning process.

Regulatory and Conduct Committee (RCC) & regulatory outcomes

The RCC is an independent decision-making body appointed by the IPA and has been hearing cases since July 2019. It is made up of both lay and Insolvency Practitioner membership and sits with a lay majority. The RCC considers and makes determinations on both complaint and monitoring report cases, and uses the CSG to apply a sanction to that finding by consent order.

At the date of the visit, the list of current RCC members was available on the IPA’s website and is regularly reviewed by the IPA’s Board. All appointments to the committee are agreed by the Board. The IPA, at the time of the visit, was considering how it might develop a policy for how it will withdraw membership if any Insolvency Practitioner member were to receive a regulatory sanction against them.

Generally, the RCC sits twice a month, once for general matters and once for IVA/personal insolvency matters. This approach was adopted due to the volume of cases that required consideration at each meeting. This now means the meetings are of a more manageable length, the papers less sizeable, and the members invited can be tailored to the types of cases being considered to avoid any conflicts of interest.

Meeting minutes

In advance of the visit, we reviewed all meeting minutes from March 2020 to April 2021.

The minutes are drafted by the secretariat within 24 hours of the meeting and reviewed by the Head of Investigations and Regulatory Committee Operations. The minutes are then sent to the chair of the meeting for agreement and signature. Any consent orders agreed at the meeting are not drafted and sent to the Insolvency Practitioners until the meeting minutes are signed.

Meeting minutes include more information than on previous visits and are set out in an easier to read format. The RCC methodically reviews the reports and evidence, and if they find that a case is made out, the CSG is used as part of the process to decide a fair sanction against the Insolvency Practitioners. An extract of the relevant part of the guidance for the allegation is now included in the report by the RO. A full copy of the guidance is available at all meetings and all committee members undertake regular yearly training which includes use of the guidance.

Where the starting point in the CSG for a prima facie finding is exclusion, or if the facts of the case are sufficiently serious, the RCC may consider whether it is appropriate and proportionate in all the facts to withdraw the Insolvency Practitioner’s licence. In some cases, the minutes did not explain the RCC’s considerations on this matter, especially where that would support its decision not to withdraw the Insolvency Practitioner’s licence.

In a small number of cases, we identified that the RCC minutes needed more fully to record consideration of whether the Insolvency Practitioner remained a ‘fit and proper’ person to continue to hold a licence. It is noted that the minutes do address whether such consideration would be appropriate or proportionate for example, but further explanation of the conclusion reached would assist in ensuring the transparency of decision making.

It is recognised that the IPA has made improvements in both the presentation and content of the meeting minutes, however further detail should be added to ensure that the decision procedure, reason for application of certain mitigating and aggravating factors, and the weight placed on these in reaching an outcome, is fully understood.

It is particularly important for the meeting minutes to be clear and document the reasoning of the RCC decision not to remove the licence, especially if the facts are serious. The test of whether the practitioner remains a fit and proper person should be considered by the RCC whenever the CSG suggests a starting point of exclusion, or the RCC considers the facts to be sufficiently serious.

Recommendation

The IPA should share a copy of their newly developed policy on RCC appointments and removal of members, including for reasons of sanctioning by the IPA with the Insolvency Service.

Recommendation

The RCC meeting minutes should more fully detail the rationale for a decision, especially in cases where consideration is required as to whether an Insolvency Practitioner remains a fit and proper person to hold a licence.

Observations of the RCC

We observed the RCC on 20 July 2021 and 7 September 2021. In the July meeting, the RCC had clearly read the case files in advance, which led to appropriate debate on the key issues and largely facilitated achieving considered outcomes.

In the second observation there was less understanding by the RCC on what the secretariat was asking it to consider and some of the members had not fully read the papers, needing to be reminded of the facts of particular cases. However, the ROs present were well prepared and had brought precedent and previous regulatory history information, which was provided as appropriate to the RCC. ROs understood their role to provide a fair and balanced view to the Committee in relation to the allegations put and the defence provided by the IP.

There was evidence that the RCC’s consideration of aggravating and mitigating factors was limited to those defined in the CSG, rather than more fully identifying and considering all potential factors.

The IPA appears to provide strong support to the RCC, with its staff preparing thoroughly, providing relevant information and understanding their roles. The RCC gave detailed consideration to the matters before them and acted with independence of mind in reaching its conclusions. These points are welcomed.

Recommendation

The IPA should designate a member of the Secretariat who can guide the committee and provide references to the IPA’s Rules, particularly when the revised Rules are agreed and implemented, and the committee functions are updated.

RCC decision making

The IPA is developing a new decision document which will be completed for all cases where a prima facie case is found by the RCC. It will document further detail of the RCC’s considerations, including the relative weighting applied to various aggravating and mitigating factors, and explanations for deviations from starting points. The IPA anticipate this will form part of the RCC’s minutes in future.

All sanctions offered by the RCC are ‘by consent’ - i.e. with the agreement of the Insolvency Practitioner. If the IP does not consent having been offered the order on two separate occasions by the RCC, then the IPA may refer the case to the Disciplinary Committee for consideration. The Disciplinary Committee, which was not reviewed on this visit, consists of a three-person tribunal which hears the case in full and will make a finding having listened to both the IPA and the Insolvency Practitioner’s arguments.

In reviewing a small number of cases, the following matters were observed:

The RCC has referred to use of the ‘totality principle’ in some cases when a practitioner has more than one allegation found against them. This principle is used by Criminal Courts in England and Wales when sentencing those who have been convicted of multiple offences. If the RCC is of the view that a level of fine is appropriate it needs to support that conclusion with detailed reasons, not only with reference to the totality principle. An explanation of why the totality principle has been applied should be included.

In cases where mitigation is offered to the RCC by the secretariat (either by way of representations by the Practitioner, or from information that the IPA has about previous conduct), it should be in line with the CSG and any associated publicity statement for a sanction must be clear about what the committee has considered in coming to its decision, in the application of mitigating factors, or when applying other principles, for example:

We were mistakenly concerned in one case that an inappropriate mitigation had been considered by the RCC, namely that there were no aggravating factors. We also observed examples where further explanation or clarification would be needed in order fully to understand the decision reached by the RCC. For example, in one case the statement explained that the practitioner had “attempted to rectify the position” by way of mitigation but did not comment on whether that attempt had been successful or not (in which case it would be a valid mitigation). Notices need to make this distinction clear in future.

We welcome the development of a new decision document and look forward to reviewing its effectiveness in the future.

We remain of the view that the RCC still, on occasions, have some uncertainty of their powers and what IPA is expecting of them on certain cases. Further, clear and unambiguous drafting in publicity notices and minutes is of key importance to avoid the risk of misunderstanding.

Recommendation

The IPA should review whether the RCC gives full consideration to factors that could influence a sanction, including whether the provisions of the CSG are used fully. The IPA should consider undertaking further training with the committee on mitigating and aggravating factors and how they should be applied to cases where a prima facie case is found.

Recommendation

The IPA Secretariat should ensure timely responses to any actions ordered by the RCC, detail of next steps and a deadline for return to the committee for further consideration are set. The IPA could consider use of the new decision form as a live document to be used to detail progress through the committee stage and set deadlines for progress.

Bonding

The IPA receives regular bordereau returns from most of its members and has a process to chase up late returns. The IPA has identified a small number of practitioners who are regularly late and is considering the use of an advisory notice and/or putting an allegation to these practitioners if their conduct does not improve.

Bonding is checked at all routine monitoring visits by inspectors and any concerns that are identified about under-bonding or failure to bond a case are highlighted in the report for the RCC.

We have seen further positive improvement in the process for checking cases when a practitioner hands-in or loses their licence, and the cases need transferring to another Insolvency Practitioner.

The IPA now requests information immediately from the Insolvency Service, bond provider and practitioner, and reconciles this information with their own records. A dip sample of cases are checked at Companies House to ensure the filing of all documents is up to date and that any cases the practitioner claims are closed and dissolved are complete.

Any discrepancies that are identified are put to the practitioner or further investigated before the schedule for a block transfer is prepared.

We welcome the work IPA has undertaken to ensure that bonding is properly recorded and utilised to inform monitoring practitioners. No recommendations.

Authorisations

The IPA currently authorises 615 Insolvency Practitioners and grants both appointment taking and non-appointment taking licences.

The IPA’s Rules state the criteria for granting a licence, and applications are sent out annually in October. Any new applications from newly qualified practitioners or those joining from another regulator must be considered by the RCC.

We reviewed a sample of 5 applications and found the IPA to have robust procedures and appropriate challenge by the committee when necessary.

The IPA’s authorisation process appears robust, with appropriate procedures for the authorisation of practitioners. No recommendations.

The IPA’s collaborative approach to regulation

The IPA are working to try and break down work silos and ensure that their staff work collaboratively to regulate IPA members.

The IPA has adopted the use Microsoft Planner for scheduling its visits and tracking progress of complaints, which has facilitated visibility of regulation work across the monitoring and complaints teams.

ROs have weekly catch ups with the Head of Process, and the whole complaints team meet regularly to discuss cases and trends. There are fortnightly meetings between the complaints and inspections teams to share information and intelligence. The senior management team meet fortnightly to consider high profile cases and strategic work.

ROs also meet after every RCC meeting to discuss the cases considered at that meeting and the outcomes reached.

The two monitoring teams (non-VPR and VPR) each meet fortnightly to discuss their work, in addition to conducting quarterly and 6-monthly reviews.

The IPA holds regular training events for its staff, including recent sessions for the whole of the monitoring and regulation teams to look at identification and presentation of misconduct and money laundering concerns.

Case-related issues can be raised and discussed at any of these forums, and the IPA employs an in-house legal advisor to provide further support on technical issues.

All of these measures are welcomed.

Recommendations

1. The IPA should provide notification to IPRS of all sanctions and advisory notices on a monthly basis.
2. The IPA should consider drafting a policy which sets out how staff should set deadlines for both Insolvency Practitioners and informants to respond to requests for extensions and set reasonable expectations with their members on how such requests would be dealt with. This will remain relevant to changes the IPA intends to make to its rules in respect of Regulation Officers having a more active role in the sanctioning process.
3. The IPA should share a copy of their newly developed policy on RCC appointments and removal of members, including for reasons of sanctioning by the IPA with the Insolvency Service.
4. The RCC meeting minutes should more fully, detail the rationale for a decision, especially in cases where consideration is required as to whether an Insolvency Practitioner remains a fit and proper person to hold a licence.
5. The IPA should ensure the RCC gives broader consideration to factors that could influence the sanction. The RCC should not just use factors that are listed on the CSG. The IPA should consider undertaking further training with the committee on mitigating and aggravating factors and how they should be applied to cases where a prima facie case is found.
6. The IPA Secretariat should ensure timely responses to any actions ordered by the RCC, detail of next steps and a deadline for return to the committee for further consideration are set. The IPA could consider use of the new decision form as a live document to be used to detail progress through the committee stage and set deadlines for progress.

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[1] A bordereau is required by statute to be returned on 21st of each month by all appointment taking insolvency practitioners to their regulatory body and will state the cases that they are office holder for and the amount of bonding cover they have obtained for those appointments.