Risk assessment for insolvency practitioners

Insolvency practitioners breathed a sigh of relief when it was announced that work done by insolvency practitioners and their firms in the course of an insolvency appointment under s388 of the Insolvency Act 1986 was excluded from FCA regulation.

Grey areas and uncertainties remain, however, and an insolvency practitioner who failed to register for an interim permission before 1 April 2014 or who has not since applied for authorisation from the FCA, when this was required, will run the risk of trading illegally.

Insolvency practitioners will probably already have already considered the following questions:-

1. Advice to an individual with financial problems that is ‘in reasonable expectation of an appointment’ by the insolvency practitioner taking the meeting is not subject to FCA regulation. Have you assessed what is meant by work that is ‘in reasonable expectation of an appointment’ by the insolvency practitioner taking the meeting?

2. ‘In reasonable expectation of an appointment’ does not mean that an appointment must follow in all cases but if a meeting is held when there is no longer a reasonable expectation of an appointment it is likely to be subject to FCA regulation. Can you be sure that all your advice to people with financial problems and all your initial meetings are in reasonable expectation of your appointment?

3. Some debt advisory services provided outside an insolvency appointment are excluded from the need for FCA authorisation if they are incidental to the business of the insolvency practitioner. Did you know that it has been indicated that the provision of professional services by an insolvency practitioner will necessarily involve the carrying on of debt counselling or debt adjusting in which case it appears that debt advisory services can never be incidental to the business of an insolvency practitioner?

4. In the event that FCA authorisation may be appropriate, do you know how to achieve this and what the implications of it may be?

Caroline Clarks insolvency career started over 30 years ago and since 1994 RMCS has been handling insolvency compliance, specialising in regulation and compliance.

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Caroline Clark RMCSC LinkedIn Caroline Clark
Contact: Caroline Clark
M: 07854 967976