The Insolvency Service’s Call for Evidence, the survey that the Insolvency Service hopes will produce information that can be used to decide the future of insolvency regulation, is a detailed and carefully considered document. Insolvency practitioners deserve no less.
Regulation is an accepted part of being a member of a profession. Regulation gives security for clients as they can have confidence in the quality of the professional advice they are given as well as providing benefits for the profession itself. The profession has an opportunity to demonstrate its commitment to high standards and integrity, particularly if the profession regulates itself.
But what is a profession? It seems that professions were initially created from groups of highly trained people providing extremely specialised advice. The knowledge and understanding of these groups of people was so complex that clients had no way on their own of knowing whether they were paying for good advice. Formal professions were created so that the people providing the advice could be formally trained, have recognised qualifications and be regulated, giving clients the confidence that the advice they received was reliable. Professions include medicine, law, accountancy , architecture, teaching and of course insolvency. Some of these professions, such as medicine and law, have been recognised for centuries while insolvency has only existed as a profession that is separate from accountancy since the Insolvency Act 1986 became law.
Wikipedia gives major milestones that may characterise an occupation as being a profession such as the establishment of a training school, a trade association, professional ethics, national licensing laws and a university school.
Peter Walton, professor in insolvency law at the University of Wolverhampton, has kindly given me his thoughts about whether insolvency is a profession. Professor Walton points out that insolvency law has become a fairly mainstream option in a number of law degrees and postgraduate law degrees. Although no specific university insolvency schools have been created in the UK Professor Walton suggests that this is probably a side-effect of the small size of the profession rather than being related to insolvency as such.
So on this basis it seems that insolvency is a profession. But in the context of the Insolvency Service’s review of insolvency regulation the professional work carried out by licensed insolvency practitioners could perhaps be considered further.
All insolvency practitioners are familiar with complex cases, both corporate and individual, that demand consideration by highly trained people carrying out extremely specialised work. Such cases do not have to be large in terms of the value of assets or the number of creditors and they would certainly fit the definition of complex and specialised professional work.
A different business model has been successfully established for some types of insolvency appointments that are perhaps more straightforward, with very similar characteristics and that may be managed using a more standard system. These insolvency appointments may on the face of it seem to be less complex and specialised. The same specialist knowledge and understanding is needed when assessing the pre appointment facts of these cases and advising as to the appropriate type of insolvency procedure as is needed, for example, as when dealing with a more obviously complex case. Similarly specialised knowledge is needed when dealing with possible money laundering offences, post appointment investigations and any unexpected events.
Creditors and other stakeholders in all types of insolvency procedure deserve the same level of protection given by insolvency regulation although the means of providing that regulation may now not be the same for every firm in the way that was appropriate when insolvency regulation started in 1994.
The Insolvency Service’s Call for Evidence is perhaps an opportunity for insolvency to redefined itself as a profession, something that has not been considered since it was decided that insolvency practitioners should be licensed and the insolvency profession was created.
RMCSC is a unique insolvency compliance consultancy providing insolvency compliance reviews and Reg 21 audits of compliance 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.