Compliance for an insolvency practitioner is most simply defined as doing a good job but the work of an insolvency practitioner includes a wide variety of tasks. Some of the legislation with which insolvency practitioners have to comply can be very prescriptive such as that for filing documents at Companies’ House and sending documents to creditors, for example. Compliance with this type of prescriptive legislation is very important and is frequently achieved with assistance from electronic diary systems, checklists and document packs.
Checklists and document packs with template reports and letters written by compliance providers have been part of the insolvency practitioner’s workplace for so long that is it difficult to imagine life without them although no-one should make the mistake of thinking that compliance with insolvency legislation is something that can be bought in.
Insolvency legislation is concerned not only with the timing of documents though, but also with their content. Financial information has to be presented in a way that complies with SIP 7, records of meetings have to comply with SIP 12 and so the requirements continue.
Insolvency practitioners who have studied in order to pass the difficult JIEB exams know that setting up systems to achieve compliance with the prescriptive legislation is relatively easy. Officeholding insolvency practitioners and their teams are also faced with difficult and unique situations in the pre appointment situations where they advise and in the post appointment cases where they are acting for the benefit of creditors and carrying out this type of work in a compliant manner is not always straightforward. Insolvency practitioners have to use their knowledge, experience and judgement in order to give good professional advice and in order to make the appropriate decisions for the benefit of creditors and this type of compliance can be incredibly difficult.
It is notoriously difficult to assess and regulate judgement and decision making processes because it is not easy to be certain of all the facts and there can be element of subjectivity. SIP 1 and the Ethics Code make it very clear that insolvency practitioners have ‘ … a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional advice …’ and ‘… should act diligently and in accordance with applicable technical and professional standards …’ (Ethics Code and SIP 1) and ‘ … in addition insolvency practitioners should ensure that their acts, dealings and decision making processes are transparent, understandable and readily identifiable … ‘ (SIP 1).
Compliance with prescriptive legislation will always and quite rightly be part of the regulation of insolvency practitioners but the Ethics Code and SIP 1 mean that the regulation of insolvency practitioners also includes consideration of the success of decision making processes and the overall standard of the case work carried out. Caution should be exercised to avoid relying on checklists to achieve compliant decision making processes rather than just for compliance with more prescriptive legislation.
RMCSC is an insolvency compliance consultancy focussing on insolvency compliance reviews including both the Ethics Code and SIP1 and that are carried out both for onward submission to the ICAEW or for the internal use of the insolvency practitioners themselves. ICAEW licensed insolvency practitioners are not the only insolvency practitioners who can benefit from an independent and objective review of their work. RMCSC also carries out independent Reg 21 audits of the efficiency of policies, controls and procedures to comply with the Money Laundering Regulations 2017. I carry out RMCSC’s insolvency compliance reviews so RMCSC’s clients have the benefit of my 25 years experience in insolvency compliance and regulation, my experience as an insolvency practitioner and my MBA, justifying RMCSC’s standing as a consultancy.
Please do not hesitate to contact me at firstname.lastname@example.org if you would like to discuss any aspect of insolvency compliance or this email with me.