Major creditors have indicated that they expect more from insolvency practitioners seeking approval for remuneration than a matrix of hours charged to the case and a narrative of standard tasks. A speaker for an insolvency licence provider said in 2015 that compliance is not a pack of standard letters.
All business people use standard documents for straightforward correspondence that is repeated frequently without change other than the name of the recipient and to do otherwise would not be commercially justifiable. Standard letters also minimise the risk of error in repeated straightforward documents fulfilling a statutory purpose and that are identical other than the name of the recipient.
The use of bought in document templates for reports and letters that should be specific to each insolvency appointment is however very different from this.
There is always the risk when using a bought in document package that major creditors will recognise the standard style and any associated omissions of the actual writer and think the less of insolvency practitioners who don’t even draft their own reports. The Pension Protection Fund is one major creditor that has spoken about this.
SIP9’s principles include the requirement for fee estimate and approval information to be presented in a manner which is proportionate to the circumstances of the case and based on all the information available to the officeholder at the time. R3’s guidance about SIP9 makes it clear that specific narrative is vital. If a bought in template report was used then in order to comply with SIP 9 it should effectively be rewritten for each individual case, making a nonsense of the idea of buying a template SIP9 report.
It is been noted while working for RMCSC’s insolvency practitioner clients that there have been too many examples of errors because standard letters and documents have been used inappropriately and without regard to the actual facts of the individual case.
Standard letters are not an automatic way of achieving compliance – compliance is achieved when skilled and motivated professional people apply their knowledge to the facts of each situation and draft high quality documents accordingly.
Insolvency practitioners frequently ask how to ensure that creditors read and react positively towards fee estimates and requests for remuneration approval. Sending a well written report rather than someone else’s draft with little more than the names changed is the easiest suggestion.
Caroline Clarks insolvency career started over 30 years ago and since 1994 RMCS has been handling insolvency compliance, specialising in regulation and compliance.
Contact: Caroline Clark
M: 07854 967976