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61. Reform to the Debtor Bankruptcy Process

The Government has announced reforms to the debtor petition process and has introduced amendments to the Enterprise & Regulatory Reform Bill presently before Parliament to make the required changes to the Insolvency Act 1986.  The reforms will replace the existing court-based entry route into bankruptcy with a modern, administrative process with electronic applications instead being made to an Adjudicator based within The Insolvency Service. The Adjudicator will decide whether or not to make a bankruptcy order by reference to prescribed criteria.

Removing debtor bankruptcy petitions from the courts, which are largely uncontested,  will free up court resources to deal with matters which do require judicial input. The court will still have  a role in hearing appeals and other applications that may be made to it during the bankruptcy process and will also continue to hear  bankruptcy petitions presented by creditors. There will be no change to the implications of bankruptcy for the debtor.

These changes are not expected to be implemented before 2015. Progress of the Bill can be followed on the BIS website at the link below:

Any enquiries regarding this article should be directed towards Tom Phillips at 4th Floor, 4 Abbey Orchard Street, London SW1P 2HT
telephone:  020 7637 6421,  email:

62. Insolvency termination clauses

The Government has tabled amendments to the Enterprise and Regulatory Reform Bill currently before Parliament to address concerns expressed around suppliers exercising termination clauses on insolvency or demanding 'ransom' payments as a condition of further supply.

The amendments to the Bill include a power which, when exercised, would allow IT supplies to be added to the list of supplies which are currently protected under sections 233 and 372 of the Insolvency Act 1986, as well as those supplies of gas, electricity, water and communications services that are not presently. That would mean that providers of such supplies would be unable to make supply after the onset of insolvency conditional on the payment of outstanding charges in respect of the supply given to the business before the insolvency. Such providers may make the supply conditional upon a personal guarantee being given by the office-holder for payment of any charges for that supply.

Further powers being taken in the Bill allow provisions to be made that mean certain terms in contracts for essential IT and utility supplies cease to have effect. These contractual terms are those that allow a supplier to terminate or change the terms of the supply as a result of a company entering administration or a voluntary arrangement taking effect, or where a voluntary arrangement in respect of an individual who is or has been carrying on a business is approved. This power will also require certain safeguards to be provided to ensure that suppliers who are obliged to continue supplying the insolvent business are adequately protected.

The Government will consult with interested parties later this year before exercising these new powers. The detailed amendments that have been tabled, numbered 84B to 84E, can be accessed via the link below: 

Any enquiries regarding this article should be directed towards Tom Phillips, 4th Floor, Abbey Orchard Street, London SW1P 2HT.

Telephone: 020 7637 6421 email:

63. The Insolvency Service is now on twitter

The Service’s Press Office has set up a twitter account and we are eager to engage with insolvency practitioners through the social media channel.

Twitter has more than half a billion users worldwide. Organisations from all sides of the insolvency industry use the site, such as R3, Moonbeever, the Financial Ombudsman and many more.

We tweet as @insolvencygovuk and are encouraging those on twitter to follow us for updates and tweet us about industry issues.

We know that many of our stakeholders are users of social media and we hope the channel will provide fresh and useful information about The Service as well as helping us engage with insolvency practitioners in a new way.

The Service will tweet policy announcements, statistics and research as well as big wins in enforcement activity. These tweets will generally include a link to more detailed information on our website.

We will also tweet alerts when public consultations are launched or are just about to close.

We do not intend to respond to every tweet relating to our activity but we plan to engage with as many as possible. Even if we do not reply directly, we will still ensure that any feedback we get from you reaches the appropriate people within the Agency.

So, please join the conversation.

Any enquiries regarding this article should be directed toward Media Relations Manager Kathryn Montague:

To read The Insolvency Service’s twitter policy please go to:

64. Insolvency Red Tape Challenge

Information about the launch of the insolvency Red Tape Challenge (RTC) was provided in the July 2012 edition of Dear IP.  The programme is led by the Cabinet Office and BIS, and aims to root out unnecessary, overcomplicated regulation.

Philip King of the Institute of Credit Managers was the sector champion for this work and led a number of meetings with interested parties to identify possible measures.  As a result, a package of deregulatory proposals was developed on which Ministers will shortly be inviting comments.  These include:

  • Increasing the flexibility as to how creditors engage in the decision making process, and removing the requirement for insolvency practitioners to hold meetings with creditors where they are not necessary.
  • Enabling insolvency practitioners to make greater use of electronic communications, for example making it easier to place notices on websites instead of sending individual letters to creditors.
  • Allowing creditors to opt out of receiving further communications where they no longer have an interest in the insolvency.
  • Streamlining the process by which insolvency practitioners report misconduct by directors of insolvent companies to the Secretary of State, enabling investigations to be commenced earlier.
  • Removing the requirement on insolvency practitioners to record time spent on cases, where their fees have not been fixed on a time cost basis, and to maintain a separate record of certain case events.
  • Removing the requirement for trustees in bankruptcy and liquidators in court winding-ups to apply to creditor committees before undertaking certain functions, to achieve consistency with powers in administrations.

More information about the proposals can be found on The Insolvency Service’s website at: Most of the proposals will require amendments to both primary and secondary legislation and a consultation on them will be published soon.

Any enquiries regarding this article should be directed towards Mike Chapman, The Insolvency Service, Policy Unit, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT; telephone: 020 7291 6765 email;

General enquiries may be directed to, Telephone 020 7637 1110.


65.  Insolvency measures announced in the Deregulation Bill 

The Deregulation Bill, published by the Cabinet Office on 1 July, includes a number of new insolvency measures.  These include proposals to:

  1. Enable the Secretary of State to cease the direct authorisation of insolvency practitioners, which will result in about 60 practitioners transferring from the Government to independent regulators;
  2. Allow insolvency practitioners to qualify in personal or corporate insolvency, or both as is the case now;
  3. Simplify the procedure whereby the Secretary of State or official receiver obtains information on director misconduct ; enabling information to be obtained direct from any person without requiring authority from the insolvency office-holder;
  4. Enable a company or director to appoint an administrator, despite the presentation of a winding up petition, if the petition was presented during an interim moratorium;
  5. Remove a requirement to give notice of intention to appoint an administrator to persons who are not themselves entitled to appoint an administrative receiver or administrator in certain circumstances;
  6. Facilitate the release of the administrator where the unsecured creditors have no interest in the administration, other than by virtue of the “prescribed part”;
  7. Change the after-acquired property provisions so that it is easier for bankrupts to operate bank accounts (important for social inclusion).
  8. Amend procedures around the appointment of interim receivers, increasing creditor choice.

The draft Bill is published at:

Any enquiries regarding this article should be directed towards Clare Quirk, The Insolvency Service, Policy Directorate, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT  telephone: 0151 625 2513 email:

General enquiries may be directed by email to:

66. Electronic communications with Insolvency Practitioners

One of the key facets of the modernisation reforms to the Insolvency Rules which came into force in April 2010 was to facilitate the delivery of documents electronically. This has obvious cost benefits and will also ensure speedier communications. With this in mind, The Service has been considering the appropriate way this could be developed in respect of communications with insolvency practitioners.

The initial focus of The Service has been on identifying high volume correspondence sent to practitioners which would more readily be suitable for sending by electronic means. There are, for instances, various letters sent out by our Investigation and Enforcement Services to practitioners on a regular basis. These include reminder letters that are issued prior to the six-monthly expiry period for the submission of conduct returns on directors.  A further example is where letters are sent following the receipt of D1 conduct returns to inform practitioners that the cases concerned are not being targeted.

Work is currently ongoing to ensure appropriate systems are in place to facilitate this communication. The Service does not therefore have a date when this is likely to be introduced and updates will be provided in future editions of Dear IP. It should be emphasised that the general principle set out in Rules 12A.7 and 12A.10 will apply whereby electronic communications will only be sent where the recipient has consented and has provided an electronic address.

It would assist if those practitioners interested in receiving communications in this format could supply their names together with the email address they would like to use to:

Any enquiries regarding this article should be directed towards Steve Lamb  of IP Regulation Section, telephone:  020 7637 6698,

General enquiries may be directed to email; Telephone 020 7291 6772

67. The Deregulation Bill

The draft Deregulation Bill contains a number of measures of interest to insolvency practitioners and has recently been subject to pre-legislative scrutiny.  The report of the Parliamentary Joint Committee has just been published and can be found at:

The Bill contains measures aimed at withdrawing the Secretary of State from the role of directly authorising insolvency practitioners, and introducing the concept of specialised authorisation for those practitioners wishing to focus purely on either personal or corporate insolvency. The aim of the latter measure is to reduce unnecessary regulation and cost which can be barriers to entering the profession. For example, those wishing to specialise and practice only in personal insolvency would no longer have to pass papers on corporate insolvency before getting their qualification.  Once qualified, they would of course only be able to practice in their chosen specialism.

Further updates will be provided on the progress of the Bill, but in the meantime if you would like to comment on any of the measures please contact:

General enquiries regarding this article may be directed to email:; Telephone: 020 7291 6772

68. Future Communications with Insolvency Practitioners

The Service is currently reviewing the way in which it communicates directly with insolvency practitioners via Dear IP.  The Service is keen to maintain regular dialogue with the profession and going forward all articles that would previously have formed part of a quarterly Dear IP issue will be published centrally on the new Government website.

Articles will be separated between those which contain technical updates or guidance requirements from those which serve as an update of a more general nature.  The Service will communicate with practitioners on a monthly basis via the Dear IP mailbox to inform them of all the new articles issued during the previous month.  We are of the view that having more contact with the profession on a monthly basis will increase confidence in the process.  There will be additional communications to alert practitioners to headline announcements or key changes.

Historical issues of Dear IP will be moved to the new website as part of this process, and The Service will be undertaking a review of older articles and removing those no longer applicable.

We would like to receive feedback from insolvency practitioners on these changes together with any other suggestions for improvement.  Practitioners can send their comments directly to  We would like to receive all feedback by 31 May 2014.

This review is part of a general overview of stakeholder engagement by The Service and may take several months to implement fully.  Therefore the next proposed issue in June will be in the same format as it is currently and further updates will be provided then.

Any enquiries regarding this article should be directed towards Joseph Sullivan 4 Abbey Orchard Street London SW1P 2HT, telephone:  0207 637 6495,  email:

General enquiries may be directed to email

69. Changes to the consumer credit regime from 1 April 2014

The consumer credit regime regulatory landscape is changing from 1 April when the Financial Conduct Authority (FCA) takes over the responsibility for this area from the Office of Fair Trading (OFT). This will result in a number of significant changes for insolvency practitioners.

The Government recently amended the legislative framework applicable to the credit activities carried out by insolvency practitioners (the link to the applicable statutory instrument 2014/366 is Insolvency practitioners have now been excluded (rather than being subject to exemption) from regulation by the Financial Conduct Authority in two specific circumstances:-

·         Where an individual  is ‘acting as an insolvency practitioner’ for the purposes of Section 388 of the Insolvency Act 1986, the exclusion covers the non-credit activities for which insolvency practitioners were previously exempt, in addition to when providing debt counselling, debt adjusting, debt administration, debt collecting and credit information services;

·         Where an individual is ‘acting in reasonable contemplation’ of an appointment as an insolvency practitioner.  Under such circumstances the exclusion only covers the carrying on of debt counselling, debt adjusting and credit information services.

An individual will not be acting in reasonable contemplation of an appointment as an insolvency practitioner whenever providing initial debt advice – only where there is a reasonable anticipation of such an appointment. It will therefore be incumbent upon an insolvency practitioner to use his or her professional judgement when considering the particular circumstances of each case to determine whether the exclusion will apply.

By way of example, if in the course of providing initial advice an insolvency practitioner advises why it is considered a Debt Arrangement Scheme or debt management plan may not be the most appropriate option then this would not necessarily be outside of the Government’s exclusion if this advice is given in reasonable contemplation of an appointment as an insolvency practitioner.

Also, where after considering the debtor’s circumstances it transpires that an insolvency appointment is not appropriate this would not necessarily render the provision of the initial advice outside the scope of the exclusion.  This is provided that the initial advice was given in reasonable contemplation of a formal insolvency appointment and that the practitioner did not continue to advise the debtor on entering into a particular debt solution, outside of the scope of the exclusion (e.g. a debt management plan), once it became apparent that such an appointment would not be

made. In such circumstances, it is acceptable for an insolvency practitioner to signpost debtors to appropriate alternative sources of advice, such as the Money Advice Service.

Debt Arrangement Schemes and debt management plans

Carrying on specific debt counselling, debt adjusting, debt collection or credit information services in relation to the provision of Debt Arrangement Schemes (a Scottish debt solution) or debt management plans is not acting as an insolvency practitioner for the purposes of Section 388 of the Insolvency Act 1986 – and consequently not within the scope of the Government’s exclusion for insolvency practitioners.

An insolvency practitioner carrying on such activity in relation to a debt management plan or Debt Arrangement Scheme is also considered unlikely to meet the criteria to be able to benefit from an exemption under Part 20 FSMA (the Designated Professional Bodies Regime).  This is because the manner of the provision of the insolvency practitioner’s service in the course of carrying on these activities is unlikely to be incidental to the provision of his or her professional services as an insolvency practitioner.

The carrying on of, for example, debt counselling or debt adjusting in the course of advising on/administering debt management plans or Debt Arrangement Schemes, is unlikely to constitute carrying on only regulated activities which arise out of, or are complementary to, the provision by an insolvency practitioner of the professional services as an insolvency practitioner to that client. The provision of professional services by an insolvency practitioner will necessarily involve the carrying on of debt counselling/debt adjusting – and for the purposes of Part 20 FSMA, ‘professional services’ are services which do not constitute the carrying on of a regulated activity.

Interim permission

For those insolvency practitioners that  may provide regulated debt advice that does not fall within the scope of the Government’s exclusion, they should consider whether they need to register  with the FCA for “interim permission”.

Any enquiries regarding this article should be directed towards Steve Lamb of IP Regulation Section, telephone:  020 7637 6698, email:

General enquiries may be directed to email Telephone 020 7291 6772.

70. The Insolvency Service Website

On 15 May 2014 our website content transitioned to GOV.UK, the central location for government information and services. Our new corporate page can be found at Our old site has now been redirected and switched off.

The GOV.UK website has been designed with users in mind by the Government Digital Service (GDS), so you may notice that much of our content has been rewritten as well as other significant changes.

The easiest way to navigate GOV.UK is to use the site search. Any content which cannot be found on may be located on the web archive of our old site

Content on the new website is driven by what evidence shows our specific user needs to be, or when publication is required via statute. Non-statutory guidance provided elsewhere by other organisations is no longer held on our site.

The site and its content will continue to develop over time and we welcome your feedback on what additional information you would like to see, or and any gaps left by the transition. Please contact us at or use the feedback option at the bottom of each page.

Further information about the new site and transition

You will notice that the way GOV.UK delivers content is very different than before, for example we no longer have tabs for our business areas on our corporate page, and you can no longer browse around our content as you did before.

The reason for this is that GOV.UK is designed as a central, consistent point of contact between the public and government, and research has shown that people mostly come to government sites with very specific user needs.

The principle aim of the site, therefore, is to fulfil those needs as quickly, simply and clearly as possible with information and guidance broken in to three main types:



Mainstream content pages (written and owned by the Government Digital Service (GDS)) are devoted to meeting the everyday needs of the general public, for example to answer questions like “I want to apply for a passport” or more relevant to us “I want to find out about bankruptcy” or “Complain about a limited company”.

In the case of this ‘everyday’ information, research has shown that users are not likely to know where to look for it, and would generally start with a search engine like Google, so in the case of GOV.UK the relevant content is not directly linked to a government department but broken down into broad headings like ‘money and tax’.

This is also why the search function on the GOV.UK homepage is ‘front and centre’.


This is the ‘about us, who we are and what we do’ information and the basis of our corporate homepage. Here you will find:

  • Our press and news stories

  • Limited information about what we do, including our objectives

  • Our documents, including publications, statistics and consultations

  • Our corporate management

  • Contacts and corporate information, including our complaints procedure, media enquiries, corporate reports and transparency data.


This content, written by us to strict GDS guidelines, is aimed at our specialist audience, for example insolvency professionals, advisors and engaged members of the public who want more detail than what is provided via ‘mainstream’.

What has changed and where are things now

The work of the transition to GOV.UK revolved around GDS identifying what our key user needs were by meeting with departments and analysing visitor information (i.e. number of ‘hits’ on individual pages on our old website) and then developing content to meet those needs.

This has resulted in some content being archived to the National Archives, and the content that remained being rewritten, or reviewed and edited to meet the GDS Style Guide. This work is ongoing.

At the top of our corporate homepage you will see a group of links for our main services and information. These provide links to our key mainstream and specialist content. We will monitor these to ensure that they remain useful to our various user groups.

What next

We will regularly take stock of the site as it is now and look for development opportunities. We would encourage insolvency practitioners to feedback any issues or common trends coming through that could be served with additional or revised content. We will be arranging for standard letters, guidance publications and other materials to be updated to reflect our new details and any additional information now required consequential to its non-transition from our old site (web address, forms/publication locations etc.) however, all the relevant content on our old site will be redirected so the above will remain functional.

General enquiries regarding this article may be directed to: 

71. The provision of consumer credit advice and related regulated activities

This article has been produced with a view to clarifying  the position regarding authorisation for insolvency practitioners – and the applicability or otherwise of the Government exclusion for insolvency practitioners and/or the FCA exemption under Part 20 of FSMA for professional firms that are supervised by a Designated Professional Body (DPB) that meet the relevant criteria.

The position as set out in the Dear IP 61 letter issued 31/03/14 is that persons undertaking regulated activities including (but not limited to) debt counselling or debt adjusting require authorisation by the Financial Conduct Authority (FCA), unless they benefit from a relevant exclusion or exemption or are an appointed representative of an authorised firm.

Where an individual is ‘acting as an insolvency practitioner’ for the purposes of Section 388 of the Insolvency Act 1986, the exclusion covers debt counselling, debt adjusting, debt administration, debt collecting and credit information services as well as the non-credit activities for which insolvency practitioners were previously exempt.

The Government exclusion also covers the situation where an individual is ‘acting in reasonable contemplation’ of an appointment as an insolvency practitioner.  However, under such circumstances the scope of the Government exclusion only covers the carrying on of debt counselling, debt adjusting and credit information services.  An individual will not be acting in reasonable contemplation of an appointment as an insolvency practitioner whenever providing initial debt advice – only where there is a reasonable anticipation of such an appointment. It will therefore be incumbent upon an insolvency practitioner to use his or her professional judgement when considering the particular circumstances of each case to determine whether the exclusion will apply.

An insolvency practitioner (or anyone else in a firm in which the insolvency practitioner operates) will not be able to rely on the Government exclusion if it is providing non-statutory debt solutions that do not constitute insolvency proceedings for the purposes of section 388 of the Insolvency Act 1986 - for example, debt management plans or debt arrangement schemes (for debtors habitually resident in Scotland). Insolvency practitioners providing such debt solutions are likely to require to be directly authorised by the FCA.

Part 20 of the Financial Services and Markets Act 2000 (FSMA), deals with the provision of financial services by professional firms under the supervision of  designated professional bodies (DPBs) of which they are members. A number of DPBs supervise the compliance of their members with rules approved by the FCA for the purpose of permitting some of their members/firms to carry on FCA regulated activities where they meet the relevant criteria for an exemption from FCA authorisation under Part 20 of FSMA. One of the key criteria for the exemption is that the regulated activity must be carried on by the firm ‘incidental’ to the provision of its professional services.  i.e. the provision of the professional service cannot itself incorporate the carrying on of the regulated activity. So, for example, an accountancy practice may be able to give debt advice under a DPB exemption without the firm needing FCA authorisation, provided that the debt counselling is only incidental to the provision of accountancy services (and the other relevant criteria for an exemption under Part 20 of FSMA are met).

To be eligible for an exemption under Part 20 FSMA, an insolvency practitioner must be a member of a designated professional body or controlled or managed by one or more such members[i]. However, because ‘professional services’  in Part 20 are services which do not constitute the carrying on of a regulated activity, the provision of debt counselling and/or debt adjusting services by an insolvency practitioner, that are outside the scope of the Government exclusion, would be carried on in the course of providing the IPs professional services (rather than incidental to them). Therefore those services are unlikely to meet the criteria to benefit from an exemption under Part 20 FSMA.

Any enquiries regarding the above should be directed towards Joseph Sullivan, IP Regulation Section, telephone: 0207 637 6495 email:


[i] "members”, in relation to a profession, means persons who are entitled to practise the profession in question and, in practising it, are subject to the rules of the body designated in relation to that profession, whether or not they are members of that body.

72. The Insolvency Service Website

As you may be aware, the Insolvency Service transitioned its website information to GOV.UK in July of this year.

Now that the site content has had time to settle in, we are looking at content for our specialist users and we would be interested in your views on how we can support the work you do.

If we, for example, were to create an area specifically for insolvency practitioners and their customers, what would you like it contain, or is there any insolvency related subject matter that you feel is not currently covered on GOV.UK that would assist you.

Please send your thoughts to

Further to this, we have an email group specifically for insolvency professionals that is used to provide relevant alerts and updates including web content changes and would welcome you and your colleagues to subscribe.

You can subscribe to the Insolvency Professionals group, and other email groups  maintained by the Insolvency Service at:

Any enquiries regarding the above should be directed towards email:

73. New Official Statistics Publication on Enforcement Outcomes

The Insolvency Service is developing a new quarterly Official Statistics release, Insolvency Service Enforcement Outcomes. Information on the number of director disqualifications, public interest winding up orders and bankruptcy and debt relief order restrictions will be reported.

The first edition will be published 20 May 2015 and will include information up to January to March 2015.

For more information, or if you would like to be notified when the new statistics are published, contact

General enquiries regarding this article may be directed to email 

74. Insolvency Guidance Paper – Retention of Title

In November, the authorising bodies issued a new insolvency guidance paper (IGP) on retention of title. IGPs are developed and approved by the Joint Insolvency Committee (JIC), and adopted by each of the insolvency authorising bodies. In this instance, the IGP was developed with the assistance of the Association of British Insurers which is represented on the JIC as one of the committee’s lay members.

Practitioners can view the new IGP here:

IGPs are issued to insolvency practitioners to provide guidance on matters that may require consideration in the conduct of insolvency work or in an insolvency practitioner’s practice. Unlike SIPs, which set out required practice, IGPs are purely guidance and practitioners may develop different approaches to the areas covered by the IGPs.   

Any enquiries regarding this article should be directed towards

75. Making the most of Intellectual Property

This article has been provided by Rosa Wilkinson, Director of Innovation and Strategic Communications at the Intellectual Property Office.

Few readers of Dear IP would, I am sure, disagree with the notion that intellectual property matters.  That is undoubtedly the case when we’re talking about an Insolvency Practitioner.  The best can make a huge difference to the end of life of a firm and the experience of creditors and those who had business relationships with it. 

In recent years developed economies have seen intellectual property move from the margins to the mainstream of business thinking. Even the likes of Dragons Den now pick up on the increased recognition that the potential for business success often depends on effective management of intellectual property assets - few bidders succeed in securing investment unless they can convince the Dragons that their good ideas, inventions and trade marks have been protected and won’t be challenged.  And these intangible assets are where we’re spending our money: in 2011, UK businesses invested significantly more in ideas and knowledge than in tangible assets like bricks and machinery, £126 billion compared to £88 billion. The trends show that intangible investment continues to rise whilst tangible investment has, at best, flat lined.

These levels of investment are not widely understood or appreciated. As insolvency practitioners will well know, too often businesses don’t keep a formal record of their intellectual property assets.  Many businesses are not always aware of the value of their intellectual property, and the advice they receive tends to ignore it when assessing their balance sheet. In all too many cases, intellectual property assets are not fully exploited within a business whether to generate additional income or to secure finance for the next phase of growth.  This latter point was something that the Intellectual Property Office (IPO) realised when that innovative companies, rich in intellectual property but poor in tangible assets, increasingly reported their difficulty accessing lending to help them grow.

In response to this the IPO developed and recently launched a new intellectual property finance toolkit that helps businesses, their advisers and the lending community talk the same language. It will help businesses identify and value their intellectual property assets when applying for finance and develop more effective management and commercialisation strategies for their intellectual property. It will also help make companies more aware of the range of finance options open to them.

This is good news for innovative firms, for business lending and for the economy more generally. 

How does this affect Insolvency Practitioners? The disciplines involved in identifying and exploiting intellectual property assets are similar to those that insolvency practitioners use to assess the value of failing firms. A deeper understanding of the value of intellectual property assets through the business growth cycle is a great opportunity to help firms that might be in trouble. It can help identify assets that may be ignored or undervalued that might potentially generate income when seeking debt finance. Similarly it can help realise the full value of a company when it goes into administration.

The simple steps and practical tools the kit offers will help improve the understanding and management of intellectual property assets. And that is good for all concerned.

76. The Care Act 2014 - Local Authorities’ etc. ‘Provider Failure’ Duties

This article which has been provided by the Department of Health, draws attention to duties on local authorities and on Health and Social Care trusts (“authorities”) under the Care Act 2014 in the event that a care provider’s business financially fails. In particular, it requests an insolvency practitioner to make local authorities aware of relevant insolvency events in relation to a financially failed provider in order to minimise the risk of disruption to services by enabling local authorities to be better prepared to step in if required.

From April 2015, the Care Act will place temporary duties on local authorities in England and Wales and on Health and Social Care trusts in Northern Ireland (“authorities”) to meet the care and support needs, of adults receiving services in their area where their care provider (in relation to England this is a provider registered with the Care Quality Commission in respect of the carrying on of a regulated activity) can no longer carry on because of ‘business failure’. Regulations made under the Care Act, the Care and Support (Business Failure) Regulations 2015 (“the 2015 Regulations”), specify the meaning of business failure for these purposes.

A business failure ‘event’ will typically involve the appointment of an insolvency practitioner to administer the affairs of a financially failed care business and if followed by the inability of the service provider to continue (i.e. both elements - failure and inability - are needed), the temporary duty on authorities to step in and meet care and support needs will be triggered in respect of each individual receiving services from the failed provider (in England this is regardless of whether a local authority was previously responsible for arranging their care or the care was arranged privately; in Wales, Scotland and Northern Ireland, the duty is limited to situations where the provider was meeting needs under arrangements made by or funded by an authority in another UK country).

The temporary duty is not triggered if the service continues but the business is insolvent; we recognise that it is fairly common for an insolvency practitioner to continue to trade a failed business whilst looking to sell it as a ‘going concern’ or provide an opportunity for the existing management or another operator to deliver a turnaround plan. Unless the care provider becomes unable to carry on, it will remain the provider’s responsibility to provide services and authorities would not be required to intervene because the service will be continuing.

The temporary duty is more likely to be triggered if an insolvency practitioner deems that the business is no longer financially viable and chooses to wind it down and close the service, leading to inability of the business to continue, with the result that care and support, or support, needs go unmet.

A local authority may not be aware that a care provider in its area has failed financially as it may not have contracts with that provider in place.

To enable local authorities to discharge their temporary duties under the Care Act, insolvency practitioners appointed in relation to a registered care provider’s business are requested to notify the Director of Adult Social Services (or their equivalents in Wales and Scotland) of the local authority in whose area the service is located of their appointment and/or business failure event and advise on their intention as regards whether to continue to trade or wind down the business as soon as possible following their appointment.

For reference, under the 2015 Regulations, available online at the following events constitute ‘business failure’ (in relation to providers who are not individuals):

  • the appointment of an administrator (within the meaning given by paragraph 1(1) of Schedule B1 to the Insolvency Act 1986 (“the 1986 Act”) or paragraph 2(1) of Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (“the 1989 Order”) takes effect;

  • a receiver is appointed;

  • an administrative receiver is appointed as defined in section 251 of the 1986 Act or article 5 of the 1989 Order;

  • a resolution for a voluntary winding up is passed other than in a members' voluntary winding up;

  • a winding up order is made;

  • an order by virtue of article 11 of the Insolvent Partnerships Order 1994 is made;

  • an order by virtue of article 11 of the Insolvent Partnerships Order (Northern Ireland) 1995 is made;

  • the charity trustees of the provider become unable to pay their debts as they fall due (within the meaning of the 2015 Regulations) 

  • every member of a partnership is adjudged bankrupt; or

  • a voluntary arrangement proposed for the purposes of Part 1 of the 1986 Act or Part 2 of the 1989 Order has been approved under that part of the Act or Order.

Any enquiries regarding this article should be directed towards Stephen Airey, Department of Health, Area 313b, Richmond House, 79 Whitehall, SW1A 2NS  telephone: 0207 210 5710, email:

77. Insolvency Service guidance to Official Receivers and DRO intermediaries on undrawn pension entitlements

In the light of the decision in Horton v Henry [2014] EWHC 4209 (Ch), guidance has been issued to Official Receivers and Debt Relief Order (DRO) intermediaries on how to deal with undrawn pension entitlements in bankruptcies and when considering DRO applications. The guidance has been issued pending further consideration of the decision by the Court of Appeal. In broad terms, Official Receivers are being advised that they should follow the later decision in Henry v Horton which provides greater protection for pensions not in payment.  The full terms of the guidance can be found at:

Any enquiries regarding the above should be directed towards Simon Whiting, External Affairs (Policy), 4 Abbey Orchard Street, London SW1P 2HT;  telephone: 0207 637 6246;  email:

78. Deregulation Bill and Small Business, Enterprise and Employment Bill get Royal Assent

On 26 March 2015 the Deregulation Bill and the Small Business, Enterprise and Employment Bill both received Royal Assent and are thereby now Acts of Parliament. Measures in the two Acts do not come into force immediately but will be commenced in a phased way over the course of the next year or more.

The first measures will come into force in May 2015. These will include:

  • Removal of the requirement for liquidators and trustees to seek sanction; and

  • Creation of a power to make regulations to prohibit or place conditions on sales of businesses in administration to connected parties[1] .

The next changes will not come into force before October 2015. These are likely to include:

  • Allowing persons to be partially authorised to act as an insolvency practitioner; 

  • Withdrawal of the Secretary of State from direct authorisation of insolvency practitioners; and

  • Provisions to strengthen the insolvency practitioner regulatory regime, including the introduction of statutory objectives and new sanctioning powers for the oversight regulator.

The following measures will not be commenced before April 2016:

  • New process of D reporting by insolvency practitioners and other disqualification changes (and the new power to seek a compensation order):;

  • Enabling administrators to bring wrongful and fraudulent trading claims and to allow liquidators and administrators to assign these and certain other claims;

  • Creditor engagement changes to replace the requirement to hold physical meetings in all cases and to allow creditors to opt out of receiving communications from office-holders; and

  • Provision that the Official Receiver will be appointed as trustee on the making of a bankruptcy order, unless the court orders otherwise.

We also take this opportunity to thank those who have helped shape the policy in relation to these measures through consultation processes and passage of the two Bills through Parliament. Further implementation updates will be provided as the timetable is confirmed over the coming months.

The new legislation is accessible via the following links:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015

Any enquiries regarding this article should be directed towards Tom Phillips at The Insolvency Service, 4 Abbey Orchard Street, London SW1P 2HT telephone:  020 7637 6421 email:

[1] This power (which lapses five years after commencement) would only be used  if the voluntary measures arising from the Graham Review into pre-pack administration  proved unsuccessful

79. Small Business, Enterprise and Employment Act 2015 and Deregulation Act 2015 - New insolvency measures coming into force in May 2015 

The following measures contained in the Small Business, Enterprise and Employment Act (SBEEA) 2015 and the Deregulation Act (DA) 2015 will come into effect on 26 May 2015.  With the exception of changes to Fast Track Voluntary Arrangements, there are no transitional measures associated with these changes, which will therefor apply to existing and new cases.

Removal of requirement for liquidators and trustees to seek sanction

Liquidators and trustees will be able to exercise any of the powers contained in section 314(2), Schedule 4 and Schedule 5 of the Insolvency Act 1986 without the need to obtain sanction (s. 120 and s. 121 SBEEA 2015).


An administrator’s term in office can now be extended with the consent of creditors for a specified period, up to one year (s. 127 SBEEA 2015)

Clarification that the court’s permission is not required where the only payment to be made to unsecured creditors by the administrator is the prescribed part (s. 128 SBEEA 2015). 

A new statutory trigger has been created to allow Scottish floating charges to crystallise in administration where funds are available to allow a distribution to be made to unsecured creditors (s. 130 SBEEA 2015).

Clarification that a winding up petition presented during an interim moratorium preceding an administration does not prevent the appointment of the proposed administrator (Schedule 6, para 5 DA 2015).

Small Debts

There are now powers to make rules to allow an office-holder to pay a dividend without the need for a creditor to submit a claim where the debt falls below a certain amount. The current intention is that these powers will not be exercised until the new Insolvency Rules come into force as part of the Rules modernisation project (s. 131 and s. 132 SBEEA 2015).

Voluntary Arrangements

The time limit for interested parties, such as creditors, to challenge the outcome of the creditors’ decision as to whether to accept an IVA proposal where there has been no interim order made, is set as 28 days from the date on which the report of the decision is filed with the court (s. 134 SBEEA 2015).

Fast-track voluntary arrangements (FTVAs) will be abolished while the small number of existing FTVAs will continue (s.135 SBEEA 2015).

Voluntary Liquidation

In a voluntary liquidation, a progress report must be issued if the liquidator changes within the first year of the liquidation (s. 136 SBEEA 2015).

We will continue to provide further updates on the other measures in the Small Business, Enterprise and Employment Act 2015 and the Deregulation Act 2015 once commencement dates are finalised.

In the meantime, if you would like further detail about the above measures or any of the other measures in the two Acts, you can visit the following pages:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015

Any enquiries regarding this article should be directed towards the policy unit on telephone: 020 7291 6740 or email:

80. Consumer prepayments on retailer insolvency: a consultation

In a consultation paper published this month, the Law Commission asks whether prepaying consumers should be better protected in the event of company insolvency.

A study by Consumer Focus in 2009 found that approximately 24.5 million prepayment transactions are made each year in the UK by around 20 million consumers. These range from the purchase of low value gift vouchers to the making of significant deposits for items like bathroom and kitchen suites. In addition, with the prevalence of internet sales, prepayments are on the rise in the UK.

However, recent high-profile retailer insolvencies have highlighted the position of consumers making these kinds of payments. The collapse of the Farepak Christmas savings club in 2006 left many consumers out of pocket. More recently, unused gift vouchers worth £4.7 million remained in circulation when Comet collapsed and furniture retailer MFI held over £25 million in customer deposits when it went into administration.

In 1982, the Cork Report on insolvency law rejected greater protection for consumers, noting that consumers often lose small and affordable amounts whereas the effect on suppliers can be catastrophic. But following the Farepak collapse, the Treasury Select Committee described the existing safety net as “inadequate and incomplete”. The OFT carried out a review, and ministers asked the Department for Business, Innovation and Skills to consider providing more protection for consumers. BIS commissioned the Law Commission to examine the existing protections given to prepayments and consider whether such protections should be strengthened.

The issues are complex and go to the heart of the insolvency regime.

Assessing the scale of the problem

An analysis of twenty major high-street retailer insolvencies undertaken by the Commission shows that the losses to customers are often low. Gift vouchers tend to be issued in relatively small amounts and, in many of the cases reviewed by the Law Commission, administrators honoured vouchers during a period of trading in administration. The analysis suggests that the consumers who stand to lose most are those who have paid significant deposits for large items such as furniture or kitchens, particularly if they have paid by cash or cheque.

Possible means of protection

The Law Commission’s consultation paper looks at a variety of possible options for protection, including:

  • Limited changes to insolvency law, in the form of a limited preference for consumers making relatively large prepayments by cash or cheque in the run up to the insolvency

  • Increased use of trust accounts

  • Insurance/bonding products

  • Increased transparency around chargeback for those who pay by credit or debit card

  • A new form of security to be registered at Companies House

  • New rules relating to the transfer of ownership in goods

The consultation asks whether sufficient protections could be achieved through improved voluntary mechanisms or whether regulation would be required.

The Law Commission is keen to hear as many views as possible, and responses are invited by 17 September 2015.

A copy of the consultation paper is available on the Law Commission’s website at:

Any enquiries regarding this article should be directed towards the policy unit on telephone: 020 7291 6740 or email:

81. New Insolvency Measures – October 2015


Deregulation Act 2015

The following measures contained in the Deregulation Act 2015 will come into effect on 01 October 2015.

Authorisation of Insolvency Practitioners

A new regime will allow for the partial authorisation of insolvency practitioners. In future, insolvency practitioners will be able to be authorised in relation solely to companies, solely to individuals or to both (fully authorised - as is currently the case).

The Secretary of State will no longer directly authorise insolvency practitioners, and so in future, all insolvency practitioners will be authorised by Recognised Professional Bodies. A transitional period of one year will allow insolvency practitioners currently authorised by the Secretary of State time to seek authorisation from one of those bodies.

Provisions introduced by the Insolvency Act 2000 intended to allow non-insolvency practitioners to act in relation to voluntary arrangements only, which were never used and are no longer considered necessary, will be removed.

Appointment and release of administrators

An amendment to Schedule B1 of the Insolvency Act 1986 amends the current requirement for a company or its directors intending to appoint an administrator to give notice of the intention to appoint to anyone entitled to appoint an administrative receiver of the company, to any holder of a qualifying floating charge entitled to appoint an administrator, and to other prescribed persons.

Once commenced, no notice will be required in respect of the prescribed persons where there is no one entitled to appoint an administrative receiver or to any holder of a qualifying floating charge. This will prevent unnecessary delays in the appointment process.

A further amendment to Schedule B1 clarifies that the approval of unsecured creditors is not required before an administrator can obtain his or her release in cases where a paragraph 52(1)(b) statement has been made.

Bank accounts for bankrupts

Changes to the law governing ‘after-acquired property’ in bankruptcy will mean that  bankrupt people will have improved access to basic bank accounts. If account holders withdraw funds, banks will be protected from recovery action by trustees in bankruptcy if they had not received specific notice that the funds had been claimed as part of the bankruptcy estate.  The banks have confirmed that they will provide basic banking facilities to bankrupt people following this change.

Other changes

A number of other minor changes will be commenced in October, including: the repeal of the Deeds of Arrangement Act 1914; the repeal of section 151 of the Insolvency Act 1986 (payment into bank of money due to a company); a change to section 7(4) of the Company Directors Disqualification Act 1986 which will allow the Secretary of State (or Official Receiver) to require information from third parties for the purpose of investigation in non compulsory insolvency cases (see section on Disqualification below); and the insertion of a new subsection into section 174 of the Insolvency Act 1986 which provides that the liquidator, when a winding-up order is rescinded, has his or her release with effect from the time the court may determine.

Small Business, Enterprise and Employment Act 2015

The following measures contained in the Small Business, Enterprise and Employment Act (SBEEA) 2015 will come into effect on 01 October 2015. 

Strengthened regulatory regime

Following two independent reviews and consultations, measures were brought forward in The Small Business, Enterprise and Employment Act 2015 to reform the regulatory regime for Insolvency Practitioners (IPs). The aim of the measures is to strengthen the regulatory framework for IPs, thus providing greater confidence in the insolvency profession.  Sections 137-142 of The Small Business, Enterprise and Employment Act 2015 achieves this by amending Part 13 of the Insolvency Act 1986 to:

  • introduce regulatory objectives for the insolvency regime
  • introduce a range of sanctions so that proportionate action can be taken where the Secretary of State is satisfied that an Recognised Professional Body (RPB) is not adequately fulfilling its role as a regulator,
  • allow the Secretary of State to apply to court to directly sanction an IP where it is in the public interest,  and
  • clarify the purpose for which the Secretary of State can charge fees to RPBs for the maintenance of their recognition.

Section 143 enables the Secretary of State to apply to court to secure compliance with a requirement that the Secretary of State has placed on an RPB.

Sections 144-146 give the Secretary of State a power to establish a single regulator of IPs should the changes to the regime not have the desired effect of increasing confidence. This is a reserve power which will lapse after 7 years if not used.

The regulatory objectives and sanctions apply for acts or omissions by RPBs in discharging their regulatory functions, or failure to comply with a new requirement, from 1st October 2015.

The power to apply to court to directly sanction an IP in the public interest applies to conduct on or after 1st October 2015, notwithstanding the date of appointment as office holder.


The measures

Sections 104-116 provide for a package of measures to further strengthen the director disqualification regime. Taking forwards proposals outlined in the ‘Transparency and Trust’ consultation that took place in 2013/14, they place a strong emphasis on accountability with provisions that:

  • give the Secretary of State and the courts the power to disqualify a person convicted of a company related offence abroad;

  • allow for the disqualification of a person who influences or instructs  unfit directors;

  • clearly set out the matters that the Secretary of State or the court must take into account when considering whether a person should be disqualified. The matters will include breaches of laws or regulations, the loss or harm their conduct has caused and its frequency;

  • extend from 2 years to 3 years the period in which the Secretary of State can apply to court for a disqualification order against the director of an insolvent company;

  • remove the restrictions on what material he can rely on when seeking a disqualification in other cases. This will allow the Secretary of State to use information from other regulators in his proceedings;

  • create compensation orders and undertakings meaning that a disqualified director can be required to pay the amount of money creditors lost through his misconduct. Compensation can be sought for conduct that occurs on or after 1 October 2015.

One final disqualification measure under the SBEEA 15 which will not be coming into force on October 2015 is the streamlined reporting of director misconduct in insolvent companies.  This measure will be implemented from April 2016 with the first of the new online conduct reports expected to be submitted in June 2016.


Although all of the above disqualification measures will come into force on 1 October, not all of them will have immediate effect, with some biting upon new insolvencies after that date and other upon conduct.

Measure - SBEEA 15

Will Affect


S104  -  Disqualification following overseas convictions

Convictions after commencement – regardless of when the offence took place


S105 - Persons instructing a disqualified director

Instructions that give rise to conduct after commencement that results in  DQ

Although this provision extends to disqualification other than under s6 CDDA, this means that we can anticipate  some delay before the first of such cases reach the application stage.


S106  - Broadening Schedule 1 CDDA

Conduct after commencement

The new schedule has wider application and will apply  to determinations by the courts under sections 2 to 4, 5A 8 or 10 of the CDDA and to the SoS in exercising discretion to accept an undertaking under sections 5A, 7 or 8


S107 - Streamlined reporting of director misconduct in insolvent companies


Insolvencies after commencement

NB – Commencement from April 2016

There will be transitional arrangements in place until September 2016 to allow for the final D1s and D2s.

Engagement with IPs already under way.

S108  -  Time Limits  for instituting proceedings increased to 3 years


Insolvencies after commencement


S109 - removing reference to “investigative material” in S8 CDDA


Conduct after commencement


S110  - Compensation Regime


Conduct after commencement

As the compensation regime will apply to insolvent cases only, we anticipate a significant delay before the first applications are made and it is unlikely that this will be before October 2016 at the earliest.

We will be engaging with IPs as we develop the detail of how the regime will operate.

De-Regulation Act 2015

Compulsory powers in non compulsory DQ investigations


Insolvencies after commencement

We will be engaging further with IPs with respect to this measure

Assignment of Actions

As well as the introduction of compensation orders, there are further measures aimed at promoting accountability and improving returns to creditors in corporate insolvencies. Sections 117-119 extend to insolvent administrations the power for an office-holder to bring fraudulent or wrongful trading actions; previously such powers were available only in insolvent liquidations. Office-holders will also be able to assign such actions, as well as rights of action for transactions at an undervalue/gratuitous alienations, preferences/unfair preferences and extortionate credit transactions.

If you would like further detail about the above measures or any of the other measures in the two Acts, you can visit the following pages:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015


Insolvency (Amendment) Rules 2015

These Rules require IPs to provide creditors with an upfront estimate of their fees and expenses when charging on a time and rate basis. They aim to increase transparency for creditors and give them an early indication of the costs of an insolvency case.

The new Rules apply to administrations, creditor’s voluntary liquidations (CVL), compulsory liquidations and bankruptcy.

Key features:

  • Introduces a requirement to provide a ‘fees estimate‘ where IP wishes to take remuneration on time and rate basis. Creditors required to approve estimate and any increase. Acts as a cap on fees.
  • Regardless of basis of remuneration, requires office holders to provide an indication of the likely work that will be needed and the anticipated expenses in a case. This is for information only – does not require creditor approval.
  • Can be given up to completion of a case, or if not possible, up to a particular milestone or for a designated period.

The new Rules can be found at

Debt relief limits (DROs) and creditor petition level increases

Two maximum limits, in place to restrict access to DRO, are increasing to make them accessible to more financially vulnerable people:-

  • The maximum level of debt will increase to £20,000 from £15,000
  • The maximum level of assets will increase to £1,000 from £300

This increase to the maximum asset level does not affect the separate limit for a vehicle which remains fixed at £1,000.

The change to debt relief orders can be viewed at:

The bankruptcy creditor petition level is increased to £5,000 from £750. This is to remove the risk of bankruptcy and its costs from those individuals with small debts.

The creditor petition order can be viewed at:

Essential Supplies

The Insolvency (Protection of Essential Supplies) Order 2015, made in March 2015, will come into effect on 1 October.  The Order will ensure that insolvency practitioners are better able to secure the continuation of supplies that are essential to the continuation of a business.

The Order allows the Secretary of State to amend sections 233 and 372 of the Insolvency Act 1986 to:

1.      Extend the list of suppliers prevented from asking for more money as a condition of continuing supply to IT suppliers;

2.      Extend the list of suppliers prevented from asking for more money as a condition of continuing supply to include ‘on sellers’ and intermediary providers;

3.      Insert new provisions preventing suppliers from relying on their insolvency-related contractual terms to charge higher prices or terminate  the contract just because a business enters into Administration or a voluntary arrangement

As the Order overrides contractual rights, a number of safeguards will also come into effect to allow suppliers to:

1.    Request a personal guarantee from the insolvency office-holder as a condition of continuing supply;

2.    Terminate supply where payment for post-insolvency supply remains outstanding 28 days after payment is due;

3.    Terminate supply with the permission of the court.

The Order can be viewed at:

General queries regarding the above can be directed to

82. The introduction of gig – 1 October 2015

On 1 October 2015 The Insolvency (Amendment) Rules 2015 (“the Amendment Rules”) will come into force. The Amendment Rules will require office-holders to provide all creditors with an estimate of their fees where they are seeking remuneration on a time and rate basis (“fees estimate”). The estimate will require creditor approval both for the amount and the basis to which remuneration is sought. In addition, in all cases, the office-holder will need to provide an indication of the likely work that will be needed in a case and the anticipated expenses. An estimation of the likely expenses will be for information only and will not require creditor approval.

An article on the Amendment Rules was included in the March 2015 (issue 65) edition of Dear IP. The purpose of this article is to address some of the queries that have been raised since the Amendment Rules were published.

Providing a fee estimate in a Creditors Voluntary Liquidation (CVL)

The legislation states at r4.127(2A) that where the ‘liquidator’ proposes to take all or part of their remuneration on the basis of time and rate, the ‘liquidator’ must prior to the basis being fixed, give to all creditors of the company the fee estimate and details of the expenses. The use of the word ‘liquidator’ is not intended to preclude an insolvency practitioner from providing this information ahead of a s98 meeting at which s/he is subsequently appointed.  What is important is that creditors are given sufficient time to make an informed decision about the reasonableness of the information provided. It would not be appropriate for the estimate to be provided for the first time at the meeting, and creditors expected to vote on it at the same time. If it is not possible to provide the information ahead of a meeting then a resolution should be subsequently sought by correspondence.

Fee estimate where liquidation follows an administration

In administration, where it is anticipated at the outset that the case will move into a CVL, the estimate may cover the work of the subsequent CVL, or if this is not practical, just the fees and expenses of the administration. This will be a choice for the administrator at the time of providing the fees estimate and will need to be made clear to creditors what work is covered. If the estimate is for the administration only but the company converts to a CVL earlier than expected, and before the level of the fee estimate is reached, the fee estimate may be carried forward to the subsequent CVL if the details of the work to be done for the fees estimated are the same i.e. the work will now be done in the CVL rather in the administration.  For example if an administrator had proposed to seek the court's approval to pay a (non-prescribed part) distribution to unsecured creditors in an administration and had estimated fees totalling £40,000 to conclude the administration (including the distribution and exit by way of a dissolution), but in fact the creditors modified the proposals so that the administration must move to CVL (and they approved the administrator's fees on a time cost basis).  If the administrator's time costs totalled £30,000 by the time he was appointed Liquidator, he would be able to incur and draw fees of £10,000 before he reverted to creditors as long as the work he was doing in the liquidation was the same that he anticipated to be done in the administration.

Exceeding the fees estimate

The office-holder must not exceed the total amount set out in the fees estimate without approval (r2.109AB, R4.131AB and 6.142AB). However as work cannot stop on a case, there may be instances where an office-holder exceeds the fees estimate before approval is sought/obtained. The Amendment Rules do not preclude fees being incurred during this period but do prevent them from being drawn down/taken unless or until approved.

Milestone estimates

It will not always be possible to accurately estimate the work that will need to be done at the beginning of a case.  If this is the case it may be better to provide an estimate up to a particular milestone or for a designated period and seek further approval at a later point. It is important that in doing so creditors are clear about what they are agreeing to and that the insolvency practitioner will need to revert to them for further approval at that milestone or later point. This is provided for in the legislation in r13.13(18A)(d) and (e) and in rules 2.109AB, 4.131AB and 6.142AB (e ) and (f).

Transitional provisions – s137 appointments

There are no transitional provisions that apply where a liquidator is appointed in a compulsory liquidation by the Secretary of State under s137. The effect of this is that the new provisions will apply to existing, pre-October appointments, where the basis of remuneration is fixed or changed after 1 October 2015; as well as to new appointments post 1October 2015. For cases where the basis is set before 1October 2015 the new rules will not apply and there will be no requirement to provide creditors with an estimate.

Use of ranges or alternatives

While acknowledging that it may be difficult to estimate fees or the work required for some scenarios, the estimate must be clear and absolute – it is not permissible for an estimate to be a range of fees, nor for alternative estimates to be given at one time. Any estimate must be fixed until and unless creditors are asked to approve any revised fees estimate. If an estimate is necessarily uncertain then creditors should be informed, and therefore have some expectation of a revised estimate. .

The only occasion where a range would be permissible would be when estimating expenses and repeating a range quoted by a third party, for instance for legal costs in litigation.

Any enquiries regarding the above should be directed towards Alison Ireland, Insolvency Service Policy Directorate, telephone: 0207 637 6365 email:


The Law Commission has published a consultation paper that looks at how to reform the law of bills of sale. Some of its proposals may have an impact on how insolvency practitioners seek to discover the goods that are available for distribution in the event of bankruptcy.

A bill of sale is a document by which a person transfers ownership of goods to another. This can cover a wide variety of transactions: people can sell their goods, exchange them, give them as gifts, or mortgage them to get a loan. If the former owner delivers the goods to the new owner, a bill of sale is not necessary. The new owner obtains ownership by virtue of possession. A bill of sale is used in situations where the former owner nevertheless keeps possession of the goods. Bills of sale can only be granted by individuals and unincorporated businesses. They must be granted over specific goods already owned by the former owner.

A former owner who remains in possession of goods subject to a bill of sale may give the impression of “false wealth”. If the former owner becomes bankrupt, it is essential that insolvency practitioners have a means of discovering the goods which are available for distribution.

Unfortunately, the current law regulating bills of sale does not provide a user-friendly means of discovering the existence of bills of sale. In some cases, continued regulation of bills of sale may be unnecessary.

The current law

Bills of sale are regulated by two Victorian pieces of legislation: the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882. The legislation distinguishes between “security bills” and “absolute bills”. “Security bills” are bills of sale that are used to borrow money: the borrower transfers ownership of their goods to the lender as security for a loan. “Absolute bills” are bills of sale that are used for purposes other than to borrow money.

Both security bills and absolute bills must be registered at the High Court in order to be valid against a trustee in bankruptcy. The High Court register is paper-based and cannot be searched online. Instead, interested third parties must ask High Court staff to search against the former owner’s name and postcode in person or by post at a fee of £45.

Uses of bills of sale

The Law Commission conducted two surveys of the High Court registry of bills of sale. It estimates that 90% of the bills of sale registered in 2014 were security bills over vehicles (so-called “logbook loans”). It further estimates that around 0.5% of the bills of sale registered in 2014 were security bills granted over goods other than vehicles.

There was no evidence that any absolute bills were registered in 2014.

Proposals for reform

In its consultation paper, the Law Commission makes proposals to reform the registration of bills of sale that could affect how insolvency practitioners search for them in three ways:

  • logbook loans would no longer be registered at the High Court. Instead, they would be registered with asset finance registries such as HPI, Experian and CDL. Insolvency practitioners would need to search these registries (using the vehicle’s registration number and vehicle identification number) to discover the existence of security bills granted over vehicles;
  • security bills over goods other than vehicles would still be registered at the High Court, but it would be possible to search for them by sending email requests to High Court staff. Searches would be conducted against the borrower’s name and postcode; and
  • registration of absolute bills would be abolished. Instead, insolvency practitioners would need to rely on the clawback provisions of the Insolvency Act 1986 to remedy fraudulent transfers of goods.

Responding to the consultation

The Law Commission welcomes responses from insolvency practitioners on how its proposals may affect them. In particular, it seeks information on the impact of the proposal to abolish registration of absolute bills.

Further information, including the full consultation paper, is available at The Law Commission seeks responses by 9 December 2015.

Fan Yang, lawyer, and Robert Ward, research assistant, Law Commission

84. Insolvency Service and Financial Conduct Authority 

On 7 December, representatives of the FCA and the Insolvency Service met to discuss matters of mutual interest – in particular ways in which to ensure that the FCA regulatory regime for debt management and the regulatory regime for insolvency remain joined up. There was particular focus on better information sharing between regulatory bodies in both regimes with a view to ensuring that adverse information in relation to IPs (and those that employ them where relevant) in one regulatory regime can be shared with- and acted upon- by the regulator(s) in the other regime if/where relevant. The RPBs are also engaged on these matters. Further discussions will be taking place in the New Year.

General enquiries may be directed to email Telephone: 020 7291 6771

85. ‘Flag it Up’ Campaign launch

On 30 November Government, together with the legal and accountancy industries, launched a joint campaign to raise awareness of the warning signs of money laundering.

The campaign, ‘Flag it Up’, has been developed with the Accountancy Affinity Group (AAG), Law Society and Solicitors Regulation Authority (SRA) to help accountants and solicitors spot the red flags which could indicate criminal activity.

Flag it Up will run through to March 2016, providing best practice guidance on how to protect business’s reputation and ensure they are not caught up in criminality.

The size and complexity of the UK financial and professional services sectors mean they are more exposed to criminality than those in many other countries, and it is essential that Government and industry work together to tackle this threat.

Through recent amendments to strengthen the Proceeds of Crime Act, Government is making it harder than ever for people to move, hide and use the proceeds of crime. The Act gives law enforcement agencies the powers to recover criminal assets and freeze suspicious funds. The Serious Crime Act 2015 made it a criminal offence to participate in the activities of an organised crime group.

The campaign website and the relevant links to money laundering guidance issued by the RPBs can be found at

General enquiries regarding this article may be directed to

86. Changes to the CFA and ATE recoverability

From 6 April the no win no fee reforms introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will apply to insolvency proceedings. These reforms came into effect in April 2013 but were delayed in respect of insolvency proceedings to give insolvency practitioners and other interested parties time to prepare for, and adapt to, the changes.

The Order, made on 10 March, means that from 6 April successful litigants in insolvency cases will no longer be able to recover After The Event insurance premiums and the uplift applied to Conditional Fee Arrangements from the losing side.

The Order can be viewed at:

Any enquiries regarding this article should be directed towards email:

87. Working with the National Employment Savings Trust (NEST)

Over the next few years The Pensions Regulator expects 1.8 million small employers will be impacted by auto enrolment, the government’s workplace pension initiative. Given many businesses don’t survive beyond five years of trading, pension providers and insolvency practitioners might be working together more often in the coming years. As one the largest pension providers in the UK, you are likely to come across NEST more regularly in the future.

The law on workplace pension provision changed in 2012. Government introduced reforms which mean that employers have to enrol eligible workers into a qualifying workplace pension scheme.

NEST was set up as part of the auto enrolment reforms. NEST was designed to be an online scheme to ensure we can deliver at scale, keep our costs low and make scheme administration as straightforward as possible for members and employers.

“Our public service obligation means we’re open to any employer who wants to use us for auto enrolment and we’re also open to any self-employed person who wishes to set up a pension. As well as always being open to employers, we are also free for them to use”.

NEST have provided the following top tips to insolvency practitioners:

1.      Activating your delegate account within 28 days

Once an insolvency practitioner has provided all of the information we need to verify you’re working on behalf of an employer, we email you a link to activate your online delegate account. This link expires after 28 days. Currently, some of the links aren’t being activated in this time frame, meaning that access to an employers’ account isn’t possible. Keep a close eye out for the email we send and make sure you activate your link in time.

2.      Informing us of insolvency

Often the very first time we hear that an employer has become insolvent is when an insolvency practitioner tells us. It’s important to tell us the right information. As an online scheme the information we hold about an employer, including their name, is entered by them directly onto our system. We only have the information that they give us. If the business has complex organisational structures, for example including umbrella companies, it’s useful to know this when you speak to us. It may be that we need you to make some adjustments to the system before we can mark an employer insolvent. These changes will depend on the specifics of the case, so the more information you have about the structure, the better.

3.      The use of contribution corrections versus the use of direct debit indemnity claims

If you find that an employer made a contribution in error and they paid by direct debit, please don’t use the option of a direct debit indemnity claim under the direct debit guarantee.

Pulling money from the scheme via the use of the direct debit guarantee takes money from NEST but does not reverse the contributions that have been made to a member’s pot. This might then result in a tax charge from HMRC being levied. Instead, to avoid this, you have two options depending on the situation:

a.      If the date of insolvency was prior to the period the contribution was made, you’ll need to log onto your NEST account to do a ‘contribution correction’. This involves reversing the expectations for each member and will automatically trigger a refund to the bank account 

b.      If the date of insolvency was during/after the period the contribution was made and contributions to members were due but void because of insolvency, you’ll need to inform us. We’ll need evidence to show that this is what’s happened and we’ll do an adjustment on the account that will refund the money.

4.      Cheques without a schedule

Whenever you are sending money to us via cheque, please make sure that you also complete the contribution schedule online too. As an online scheme, without the contribution schedule we’ll not know how to allocate the money and so we’ll return it to you. This means that the contributions go unpaid and the employer has not met their legal duties.

What can you do if you have any issues?

If you experience any issues with a case you’re dealing with there are several channels to help. Your first port of call should be the ‘How To’ guides on the website. These helpful guides contain a lot of the information you’ll need to know. If you want to talk to someone, there is a web chat option where an agent can guide you through any issues. If you still need help, there is also a contact centre.

With the number of small employers due to stage over the next few years, NEST are always looking for ways to become more efficient and work more effectively with insolvency practitioners. If practitioners would like to provide any feedback, please contact Georgina Maskell (

General enquiries may be directed to email 

88. Insolvency Service Consultation: A Review of the Corporate Insolvency Framework

As practitioners may be aware, the Government is currently consulting on proposals to improve the corporate insolvency framework. The UK’s corporate insolvency regime is highly regarded internationally (ranked as one of the top 15 in the world by the World Bank), but we want to ensure that it continues to deliver the best possible outcomes for business.

The consultation therefore seeks views on whether the insolvency regime needs updating in light of international principles developed by the World Bank and the United Nations Commission on International Trade Law (UNCITRAL), as well as in the wake of recent large corporate failures.

We are inviting comments on four broad areas for reform, including:

  • introducing a moratorium for distressed businesses to benefit from protection against legal action while considering their options for rescue; 

  • widening the definition of essential supplies, with appropriate safeguards for suppliers, to assist distressed businesses;  

  • developing a new restructuring plan to increase the options available to rescue businesses; and

  • increasing the availability of rescue finance.

We are keen to hear from as wide a range of stakeholders as possible, so please do take the opportunity to comment on the proposals. The consultation and response form can be accessed online at:

The consultation was launched on 25 May 2016 and will run to 6 July 2016. Following the close of the consultation we will analyse responses and compile a government response, which will be published on GOV.UK in due course.

Any enquiries regarding this article should be directed towards Steven Chown, Strategy & Change - Policy, 4th Floor, 4 Abbey Orchard Street, London, SW1H 2PT telephone: 020 7637 6501 email:

89. Financial Sanctions and Insolvency Practitioners

The Insolvency Service is aware of some individuals who may be subject to financial sanctions who are seeking to use both solvent and insolvent liquidations to circumvent financial sanctions. This article provides some information about financial sanctions and details of a free subscription service to identify designated persons, entities or bodies to which insolvency practitioners are encouraged to subscribe.


Certain formal insolvency procedures could be used to circumvent or breach financial sanctions. Breaching financial sanctions is a criminal offence. This notice sets out the responsibilities of insolvency practitioners and directions to further sources of information and guidance.

Financial sanctions are in force against a number of regimes, individuals and companies. In practice this means that you cannot do business with such designated individuals or companies, companies owned or controlled by designated entities, or undertake any relevant transaction that may be indirectly benefitting a designated entity, unless there is a relevant exemption in the sanctions regime or, you have a licence from the Office of Financial Sanctions Implementation (OFSI). For further information on financial sanctions, see the OFSI guidance;

How do sanctions affect Insolvency Practitioners?

In order to comply with financial sanctions, insolvency practitioners must ensure the following:

  • insolvency services are not provided to, or for the benefit of, a designated person (a company or individual subject to financial sanctions) or an entity owned and/or controlled by a designated person;
  • transactions which are subject to financial sanctions (for example, transfers of funds in some circumstances) are not carried out;
  • assets which should be frozen must not be realised or made available to a designated person;
  • formal insolvency processes are not used as a route to circumvent sanctions;

unless there is a relevant exemption in the legislation of the sanctions regime or you have an OFSI licence that permits you to do so.

Insolvency practitioners should familiarise themselves with financial sanctions and understand how they apply to their business. When conducting usual anti-money laundering checks, practitioners should refer to the OFSI list of financial sanctions targets: (section 3 gives more information on this list and how to use it).

Practitioners may also find Section 9 of the OFSI Guidance useful: Compliance for Businesses:

It is a criminal offence to breach the prohibitions in financial sanctions regimes. If you find that you have already carried out an economic transaction that was prohibited by sanctions (for example by dealing with a designated person’s funds without an OFSI licence) you should contact OFSI to regularise the position. (


Under certain circumstances a licence may be issued to allow transactions to take place. These circumstances are limited to the licensing grounds as set out in the legislation of the sanctions regime and practitioners should be aware that not all transactions or insolvency services can be licensed. For more information on licences including the process of applying for a licence and the circumstances in which they can be provided please refer to the OFSI guidance.

Licences cannot be issued retrospectively so it is important to apply for a licence before any work takes place.

Please note that OFSI will only consider licence applications where you have identified a valid and appropriate licencing ground that permits a licence to be issued as set out in the relevant EU legislation.

Further Information 

OFSI operates a free subscription service which allows subscribers to receive
updates whenever there are changes to financial sanctions effective in the UK. Practitioners can find out how to subscribe at:


Any enquiries regarding this article should be directed towards M Treasury’s Office of Financial Sanctions Implementation; email:  telephone 020 7270 5454.

90. Dealing with animals – availability of guidance from Animal and Plant Health Agency

This article is being issued to remind insolvency practitioners that there are legislative requirements concerning the welfare of animals and that an office holder, as a keeper of those animals, will be responsible for ensuring that those requirements are not compromised. In the case of farmed species (cattle, sheep, pigs, poultry and, in some cases, horses and camelids) there are a range of disease control requirements that may be in place concerning the way in which they are kept, their movement, transport and method of sale. Where an office holder is dealing with farmed livestock they should contact the Animal and Plant Health Agency (APHA) (03000 200 301), choosing the ‘other enquiries’ option, in the first instance, for advice.

If animals are of a species that may be endangered, consideration should be given to contacting the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) Unit at the APHA. To establish if an animal is an endangered species a check may be made on the CITES database.

Most animals that are considered wild, dangerous or exotic require a licence. This will be issued by the relevant local authority. If there are concerns regarding the legitimacy of a wild/dangerous animal or advice is required on any possible actions, the local authority should be able to assist. 

Any enquiries regarding this article may be sent to 

91. Legal Profession Privilege re Shlosberg [2016]

A recent Court of Appeal case re Shlosberg [2016] EWCA Civ 1138 has clarified the way in which Legal Professional Privilege material can be used by a trustee in bankruptcy.

This case concerns, amongst other things, whether and to what extent a trustee in bankruptcy is entitled to use documents which were subject to legal professional privilege in favour of the bankrupt, prior to his bankruptcy. This case held that while the trustee can take possession of privileged documents under section 311(1) of the Insolvency Act 1986, the right to assert (and therefore waive) privilege in a document does not pass to the trustee, that right is personal to the bankrupt. While the trustee can inspect the documents and use the privileged information to realise the bankrupt’s estate, the trustee cannot use it outside his/her statutory functions.

It had previously been thought that the trustee would be able to waive privilege in the same circumstances in which, prior to his bankruptcy, a bankrupt would have been able to do so, provided that the documents in question concerned property within the bankruptcy estate or otherwise related to his estate or financial affairs

Following the judgement, guidance has been issued to Official Receivers, extracts of which are set out below.

Extract from OR guidance:

A bankrupt is required to deliver up all records, including privileged material, to the trustee. The trustee can deploy privileged material against the bankrupt but may not otherwise use privileged material in a manner that would amount to a waiver of privilege. Where the trustee is deploying privileged material in court, they ought to apply for an order under CPR 31(22) that the material not be disclosed further.  

The trustee, in an exceptional case, may ask the bankrupt to voluntarily waive privilege so that the documents can be disclosed onwards. This would be on a voluntary basis only and we would expect a properly advised bankrupt to refuse to give such a waiver.

Any enquiries regarding this article may be sent to   

92. Early notification of potential high profile insolvencies

The office of the Chief Executive of the Insolvency Service would appreciate early notification of any potential high profile insolvencies. In particular, we would like to know about any cases that could result in significant redundancies, could have impact at local and national level, and/or would attract significant media and ministerial interest. Early notification will allow us to prepare and put in place protocols to deal with such insolvencies, handle high volume of redundancies, or prepare for briefing of ministers and/or officials. All notifications will be treated in the strictest confidence.

Please send all notifications to

Such a notification would be separate from the obligation to notify the Secretary of State about redundancies using the HR1 process –

Any enquiries regarding this article may be sent to

93. Retailer insolvency and Refunds / Chargeback – guidance to be given to consumers who have made prepayments or have paid for goods or services


This article provides guidance for insolvency office holders on the information to be given to consumers about claiming refunds from card issuers where a retailer has become insolvent before delivering goods or services. It includes standard wording which should be put on the insolvent retailer’s website.


In July 2016 the Law Commission published a report on Consumer Prepayments on Retailer Insolvency. The full report, including an executive summary, is available at: Consumer Prepayments on Retailer Insolvency.

In the event of retailer insolvency, consumers often stand to lose prepayments made in advance of receiving goods or services unless there are sector based protections in place for them (e.g. for travel).

Law Commission recommendations

The Law Commission made a number of general recommendations designed to improve the chances of consumers regaining prepayments they have made. The Government is considering these further and intends to publish a full response in summer 2017.

One area of the Law Commission’s recommendations relates to consumers who have paid for a product by credit or debit card. A consumer who has paid by credit or debit card for undelivered goods or services has the ability to recover money through the card issuer as card payments are protected by statutory and voluntary schemes. 

Payments by credit card (including charge cards issued under a Consumer Credit Act regulated agreement) are protected by a statutory scheme: section 75 of the Consumer Credit Act 1974 gives consumers a legal claim against the card issuer where the goods or services cost more than £100 and less than £30,000 and are not delivered.

For both credit and debit cards (including pre-paid cards), the card schemes (which set the rules governing payment transactions between the card issuer and the merchant acquirer) provide a system of “chargeback”. Chargebacks are voluntary schemes, where the rules are set by the card schemes, which allow the card issuer to ask the merchant acquirer to reverse a payment made by card and is not subject to minimum or maximum monetary limits. Claims for a chargeback must be made within time limits and these vary across card schemes.

The Law Commission found that the statutory and chargeback voluntary schemes operated by the card schemes, collectively referred to as chargeback in this article (but referenced as refund in the consumer communications – see Annex A and B), need to be better understood. The Commission made a number of recommendations to the Insolvency Service, UK Cards Association (UKCA - the body representing the card payments industry’s issuers and acquirers), insolvency practitioners and card issuers to achieve this. 

The Government welcomed the Law Commission’s recommendations on chargeback and this guidance implements those recommendations for the insolvency practitioner industry. UKCA have implemented recommendations regarding refund / chargeback guidance for consumers and a Code of Best Practice for card issuers on the provision of information to consumers on chargebacks.

Guidance for insolvency practitioners

The Insolvency Service has worked with R3, the Insolvency Lawyers Association, ICAEW, UKCA, card schemes (Mastercard and Visa), the Law Commission and consumer groups to develop the guidance in this article on the information which should be made available to consumers when seeking a chargeback where there has been a retail insolvency. The main element of the guidance is that a standard notice should be published by the office-holder on the insolvent retailer’s website.

Research by UKCA shows that, in 2016, 77% of national retail sales were made by card. Therefore, it is likely that in all retail insolvencies which feature consumer deposits / prepayments or payments, some would have been paid by card. Publication of the standard notice would therefore be expected in the majority of retail insolvencies (subject to the comments below). 

Reclaiming money through a chargeback will often provide consumers (including those who have made a prepayment) with the best chance of getting their money back following a retailer’s insolvency. Following this guidance there is likely to be an increased awareness of the payment card industry’s card chargeback facility amongst consumer creditors enabling them to recover their money where a card had been used to make the payment.

Notice to be published on retailer’s website

·         It is common practice for insolvency office-holders in large retail insolvencies to ensure the retailer’s website is maintained for a period in administration or following liquidation. Where this occurs the office-holder should publish on the retailer’s website the standard notice for consumers at Annex A or B, in relation to payments made by credit and debit cards for goods or services which have not yet been received

·         As time limits for chargeback vary across card schemes, the standard notice should be published in circumstances where it is possible that goods or services may be delivered, but where it is not yet certain that they will be.

·         Annex A should be used where there is a possibility that pre-paid goods and services will be supplied by the due date. Annex B should be used where pre-paid goods and services will not be supplied by the due date (and should replace Annex A when there is certainty that goods and services will not be supplied)

·         The standard notice should also be published on social media sites maintained by the retailer, if the office-holder considers that is the best means of drawing it to consumers’ attention.

·         In relevant cases where the retailer did not maintain a website, office-holders should draw the contents of the standard notice to consumer creditors by other means (e.g. for small retailers, by a notice in the shop window or correspondence with consumer creditors).

·         It may be appropriate for the standard notice to be hosted on an insolvency related site in place of, or in addition to, the retailer’s website, e.g. in circumstances where the retailer’s site is used to direct traffic to that site where information about the insolvency procedure is hosted.

·         The standard notice should be displayed prominently on the website, taking into account other information (e.g. for employees) which may also need to be displayed with appropriate prominence.

·         It may be appropriate to publish other information alongside the standard notice, e.g. where it is known that some goods or services will be provided where fully or partly prepaid for, or not to publish the notice at all where all prepaid contracts will be honoured.

Other evidence of insolvency

·      The standard notice should be sufficient evidence of insolvency for a card issuer to deal with chargeback claims, but where this is not the case the office-holder should provide consumer creditors with other evidence or information (e.g. confirmation that goods and services will not be delivered) as card issuers may reasonably require. 

·         In the case of a travel failure, and where there is a bond or insurance scheme in place such as provided by ATOL or ABTA, the consumer creditor is advised to speak to their card issuer regarding what specific form of evidence it requires for a failure of this type.

The office-holder should use their professional judgement when following this guidance, the overriding objective being to make those consumers who have made payments for goods and services which are not expected to be delivered aware of their ability to apply for a chargeback from their card issuer.

According to the Law Commission, some insolvency practitioners are concerned that telling consumers about chargeback could be seen as preferring one set of creditors at the expense of others.  The Insolvency Service does not believe that is the case.

Any enquiries regarding this article may be sent to

Annex A

XXXXXX (in administration / liquidation)

Notice to customers regarding credit and debit cards

At present it is uncertain that goods and services ordered before [the company] entered [administration / liquidation] will be supplied.  If you have made a deposit for or paid for goods or services by credit or debit card (including charge and pre-paid cards)  and the goods or services are not going to be received by the due date, you may be able to get your money back by claiming a refund from your card issuer. 

Please contact your card issuer as soon as you can if this may apply to you (there is no need to wait until the due date before contacting your card issuer).  Further information including on time limits that apply is available from the UK Cards Association Credit and debit cards: A consumer guide.


Annex B

XXXXXX (in administration / liquidation)

Notice to customers regarding credit and debit cards

If you have made a deposit for or paid for goods or services by credit or debit card and the goods or services are not going to be received by the due date, you may be able to get your money back by claiming a refund from your card issuer.  Please contact your card issuer as soon as you can if this may apply to you.  Further information including on time limits that apply is available from the UK Cards Association Credit and debit cards: A consumer guide

94. Complying with The Claims Management Regulator


The Claims Management Regulator (“CMR”) works to protect and promote the interests of consumers and the public, and to ensure that the organisations acting as a Claims Management Company (“CMC”) understand and comply with the regulations of operating in this sector. The CMR regulate organisations that offer a service for people hoping to claim compensation for:

  • Personal injury

  • Mis-sold financial products and services

  • Employment and redundancy (including payments from The Redundancy Payments Service)

  • Criminal injury

  • Industrial injury

  • Housing disrepair

Under the Compensation Act 2006, any persons wishing to carry out a regulated claims management service must be authorised unless they are exempt.

Services covered by the Compensation Act 2006

  • Advertising for or seeking out persons who may have a claim. This includes (but is not limited to) operating a website, TV and radio advertising, leaflets, telemarketing (including consumer surveys), obtaining consent for a third party to contact a client about a potential claim, asking a potential client if they have a claim, etc.

  • Advising a claimant or potential claimant in relation to his/her claim or cause of action.

  • Referring details of a claim or claimant, or a cause of action or potential claimant, to another person. This includes the provision of data or the generation of leads.

  • Investigating or commissioning the investigation of the circumstances, merits or foundation of a claim with a view to using the results in pursuing the claim.

  • Representation of a claimant in writing or orally. This includes contacting a financial institution or the Financial Ombudsman Service about a mis-sold PPI claim, contacting an insurance company about a personal injury claim or representing a client in employment mediation or tribunal.

CMR Guidance

To help you understand if you need to apply for authorisation or have ‘exempt status’ as a CMC or introducer, please follow the link below:

The above publication contains details of:

  • the sectors covered by claims management regulation

  • services that are regulated

  • which businesses are exempt

  • introducers acting as referrers

Corporate structure

Each separate corporate body (for example, limited company, sole trader or limited liability partnership) providing regulated claims services must be individually authorised. An organisation can not obtain authorisation and share it with another legal entity or across a group of companies.

Exemption from CMR Authorisation

Some organisations are exempt from the requirement to be CMR authorised as either a CMC or an introducer. This applies to those who provide certain activities that are already regulated by other regulatory agencies and to certain other categories of persons or organisations.

It is an offence to provide regulated services unless CMR authorised and it is for any organisation to ensure they fully comply or meet the exempt status requirements.

Intermediaries assisting claims under The Employment Rights Act 1996.

An insolvency practitioner should only refer employees to CMCs, who fully comply with CMR requirements (or those with exempt status) for assistance in making a claim for compensation for wrongful or unfair dismissal, redundancy, discrimination and harassment. This includes claims relating to unpaid wages and other employmentrelated payments.

Where an insolvency practitioners refers a person to a CMC, they should be able to evidence that they are satisfied that the CMC complies with CMR requirements. A CMC should not act as both an agent of the insolvency practitioner and an agent of the claimant in the same case. This would present a conflict of interest within the statutory roles fulfilled by the insolvency practitioner.

To help enforce legislation and Government policy, any CMR breaches identified will be referred to the appropriate Recognised Professional Body for further consideration.

Guidance has previously been issued in Dear IP regarding the use of CMCs and we are taking the opportunity to remind insolvency practitioners of this earlier publication:

Any queries regarding authorisation or exempt status should be addressed to the Claims Management Regulator at: or by phone 0333 200 0110

General enquiries may be sent to:

95. Pensions in bankruptcy – exclusion of a pension administered from another EU State

The Insolvency Service is concerned to ensure that EU citizens who have exercised their right to free movement within the EU are not disadvantaged by the operation of UK law.

All approved (by HMRC) pensions in cases made on a petition (or application to the Adjudicator) presented on or after 29 May 2000 are excluded from the bankrupt’s estate. A pension administered from another EU State may be approved in the State of establishment but not approved by HMRC in the UK.

If a pension is unapproved by HMRC it is possible for the bankrupt to seek to exclude their rights from the bankruptcy estate under the Occupational and Personal Pension Schemes (Bankruptcy) (No. 2) Regulations 2002 by entering into a qualifying agreement with their trustee. Guidance has been given to Official Receivers that they should enter into such agreements where the EU pension arrangement is an occupational scheme (and where bankrupt was an employee but not a director of the company) or where the arrangement is a recognised pension scheme under the laws of the EU State in which it is based. The guidance to Official Receivers is that in such cases the qualifying agreement should be unconditional, the practical effect of which will be to treat the bankrupt in the same way as a UK national with comparable UK pension arrangements.

General enquiries may be sent to

97. Issuing the Statement of Affairs post-GDPR

This article is being issued to clarify, in the Insolvency Service’s view, the impact of the GDPR on the disclosure of individual creditors’ information contained in a statement of affairs.

When processing personal data, there needs to be a valid and lawful basis for doing so. One such valid lawful basis is a legal obligation, either common law or statute, to process such information.

Insolvency legislation states that a statement of affairs must contain the names and postal addresses of creditors; that these details for employees and consumers paying in advance for goods or services should be set in a separate schedule; and that such a schedule should not be sent to Companies House.

It is therefore the view of the Insolvency Service that a fully completed statement of affairs should be circulated to creditors. In terms of individual cases, it is expected that the insolvency practitioner as office holder would use his/her discretion and where it may not be appropriate to share some creditors’ names and addresses with other creditors, then they should not do so. Insolvency practitioners should ensure that case notes fully explain any decisions in this regard.

Any enquiries regarding this article may be sent to

98. Insolvency Code of Ethics – update

During the first half of 2017, the Joint Insolvency Committee issued a revised draft of the Insolvency Code of Ethics (the Code) for consultation. That consultation closed in July 2017 and since then the group set up to consider revisions to the Code has been undertaking further steps.

The group, comprising a variety of insolvency stakeholders including HM Revenue and Customs, Max Recovery and representatives from the Recognised Professional Bodies (the RPBs) and the Insolvency Service has considered the consultation responses, drafted further amendments to the Code and discussed the revised draft with the RPBs who will require to adopt the Code.

Consultation responses

A total of 22 consultation responses were received broken down as follows:

IPs/IP Firms                                                               11

Creditors/Creditor representative bodies             3

RPBs/IP trade body                                                 6

Debtor representative bodies                                 2

Over 300 specific comments were raised by those who responded to the consultation.

Most respondents thought that the revised Code provided a clear structure and language under which to operate. There was also strong support that broadly the provisions in the Code relating to an insolvency practitioner obtaining specialist advice or services (Part 2 Section C) were appropriate although this was less evident when considering provisions relating to where the specialist advice or services provider is an entity or person where a personal or business relationship exists.

A significant majority thought that the new provisions relating to the specific application of the Code where the insolvency practitioner is an employee required further refinement.

There was no clear consensus on whether additional guidance would assist stakeholders to understand the application of the framework to specific situations.

As was perhaps expected the consultation questions on obtaining insolvency appointments generated polarised views with no clear conclusion from respondents. Over 80% of respondents considered that the Code should not make any significant distinction in its application to personal insolvency appointments and corporate insolvency appointments.

Post consultation revised Code

The working group considered all points made from consultation respondents and has provided a revised draft of the Code to the Joint Insolvency Committee and the RPBs.

The revised draft incorporated the following amendments:

  • Changes in emphasis to reduce perception or impression that there will always be appropriate safeguards available.
  • Inclusion of insolvency practitioners under consultancy arrangements within the scope of the section dealing with practitioners as employees due to similar issues affecting both. The section was significantly redrafted to provide further examples of safeguards that may be available and highlighting that the safeguards available should be considered prior to accepting employment as well as during employment.
  • Widening the scope of the section on obtaining specialist advice and services to deal with referrals for specialist advice/services for example to include to other group companies and clarifying that any preferential trading terms must be passed for the benefit of the estate.
  • The section on fees and other types of remuneration was reworked to deal only with referral fees and commissions. The structure of the section was amended to deal separately with payment and acceptance with a similar approach adopted for the section on hospitality and gifts. The consultation did not give a clear indication of whether there should be any relaxation in an insolvency practitioners being permitted to pay referral fees and therefore the status quo position was maintained.
  • Consequently, the section on obtaining insolvency appointments was realigned to dealing only with advertising and marketing for insolvency appointments.
  • Sections A-I were reordered into a more logical order.
  • A new section J was added to deal with the application of the Code in the Republic of Ireland.

IESBA Code of Ethics

As was highlighted in the note accompanying the consultation draft in 2017, IESBA have been undertaking a revision of their Code of Ethics. This will impact in particular on ACCA, ICAEW, ICAS and CAI Code of Ethics as these bodies are required to reflect the IESBA Code of Ethics within their own Code. IESBA have now finalised their restructured code which will become effective 15 June 2019.

The revised IESBA Code is significantly different in several areas beyond the current Code. Changes include those to make it easier to navigate, use and enforce. Major revisions have been made to the unifying conceptual framework—the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence.

This includes:

  • Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles;
  • New guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment; and
  • what a professional accountant should do if they encounter actual or suspected “Non-Compliance with laws and Regulations (NOCLAR)”

The impact of the restructured IESBA code as adopted by the accounting bodies is being fully assessed, however is anticipated that the restructured code will impact on the insolvency code of ethics.

Adoption of a new Code

The accountancy RPBs have indicated that they will be adopting the new IESBA Code between June 2019 and January 2020. In light of the IESBA changes which will require to be incorporated into an Insolvency Code of Ethics, the Joint Insolvency Committee and Insolvency Service considered whether it was desirable to introduce a new Code which would require to be replaced again within a relatively short period of time. It was concluded that as the fundamental principles within the Code have not changed any revised Code at this stage would not significantly alter insolvency practitioners obligations under the Code. The revised Code will therefore be updated to reflect the amended structure, revised safeguard provisions and other matters under the new IESBA Code prior to being issued and being brought into effect.

Any enquiries regarding this article may be sent to

99. Review of the Regulation of Insolvency Practitioners: A Call for Evidence

The Insolvency Service has issued a Call for Evidence which aims to gather views on the current regulatory framework for insolvency practitioners. The document seeks views on a number of areas and also looks to assess the impact of statutory Regulatory Objectives for the insolvency profession, introduced by The Small Business Enterprise and Employment Act 2015 (SBEEA 2015) in October 2015 

The Regulatory Objectives were brought in alongside a number of other measures in order to help increase transparency and improve consistency of outcomes in the regulatory sphere.

The Call for Evidence paper seeks responses to questions on 3 key areas: 

·       Impact of the Regulatory Objectives

·       Confidence in the current regulatory framework

·       Suggestions for a new/alternative regulatory framework, including a single regulator

The “SBEEA 2015” includes a reserve power, expiring in October 2022 to enable the Secretary of State to make regulations to establish a single regulator of insolvency practitioners.

Responses to the Call for Evidence will help inform Government whether there is need for a further consultation on a single regulator or alternative options to amend the regulatory framework.

It is important to emphasise that the power to create a single regulator of insolvency practitioners will not be exercised without a full consultation and cost/benefit analysis of any proposed reforms.

The Insolvency Service is engaging with key stakeholders including with R3 and the Recognised Professional Bodies. We welcome responses from insolvency practitioners which will feed into the evidence gathering process.

A link to the Call for Evidence document can be found here:

Responses are sought by 4th October 2019.

General queries may be sent to email

100. Review of the Regulation of Insolvency Practitioners: A Call for Evidence

The Insolvency Service issued a Call for Evidence which was published on 12 July, seeking views on the workings of the current regulatory framework for insolvency practitioners.

The Call for Evidence closes on the 4 October so there is a short window of time remaining for insolvency practitioners to submit their views. We value your input as it will help Government form a view on the impact of the Regulatory Objectives and whether any changes are required to the existing regulatory landscape. 

We look forward to hearing from you.  

Enquiries regarding this article may be sent to:








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