Part 2 - Restrictions imposed on bankrupts by other legislation

January 2008     

25.20 Introduction

This part is divided in to two sections, Section A lists the restrictions and disqualifications imposed by non-insolvency legislation,  which are automatically applied to undischarged bankrupts. Section B lists restrictions which were formerly imposed by non-insolvency legislation against undischarged bankrupts, but which have subsequently been repealed, many as a result of the amendments applied by the Enterprise Act 2002 (Disqualification from Office: General) Order 2006.

It should be noted that the restrictions/repeals listed here cannot be guaranteed to be exhaustive, and the legislation affecting restrictions against an undischarged bankrupt may be subject to revision at any time. 

 

Section A  

25.21 - Restrictions in force against undischarged bankrupts

The following paragraphs list restrictions/disqualifications imposed by other legislation against an undischarged bankrupt . The paragraphs have been grouped under general subject headings similar to those used in the Annex to this chapter. 

 

Disqualification as trustee (charities and pensions)

25.22  Charities Act 1993 s72 - trustee of a charity 

Section 72 of the Charities Act 1993 disqualifies anyone who is an undischarged bankrupt (or who has had his/her estate sequestrated) from acting as a trustee of a charity. [Note 1

 

25.23  Pensions Act 1995 s 29(1)(b) – trustee of a pension scheme 

Section 29 of the Pensions Act 1995 disqualifies an undischarged bankrupt from being a trustee of a pension scheme, unless the disqualification is waived, on application, by the Pensions Regulator. [Note 2]  

 

Births, deaths and marriages 

25.24 Registration of Births, Deaths and Marriages Regulations 1968  

An undischarged bankrupt is disqualified from being appointed as a Registrar of births, deaths and marriages as a result of the application of regulation 5(a)(i) (disqualification for appointment) of the Registration of Births, Deaths and Marriages Regulations 1968. [Note 3

 

25.24A Acting as Executor of a will

There are no restrictions upon an undischarged bankrupt that would prevent them from acting as the executor of a will.   

 

Education 

25.25 School Governance (Constitution) (England) Regulations 2003 (as amended by the Education (Disqualification Provisions: Bankruptcy and Mental Health) (England) Regulations SI 2006/2198

(paragraph amended September 2009)

An undischarged bankrupt is not disqualified from holding office, or continuing to hold office, as a school governor. [Note 4]  

 

Environment

25.26  Environment Act 1995 - membership of a flood defence committee  

An undischarged bankrupt is disqualified from being or becoming a member of a regional or local flood defence committee. [Note 5]  

 

Financial Matters 

25.27 Consumer Credit Act 1974 - consumer credit licence 

A consumer credit licence held by an individual is terminated if that individual is the subject of a bankruptcy order (licence is not terminated if the individual is  subject to a BRU/BRO). [Note 6

 

25.28 Individual Savings Account Regulations 1998  

Following the making of the bankruptcy order against him/her, an undischarged bankrupt is disqualified from acting as account manager of an account held under the Individual Savings Account Regulations 1998. [Note 7][Note 8

 

25.29 Personal Equity Plan Regulations 1989 

Personal Equity Plan Regulations 1989, regulation 15(1)(b), disqualifies an undischarged bankrupt from acting as a personal equity plan manager.  [Note 9

 

Housing 

25.30 Estate Agents Act 1979 -  estate agents  

An undischarged bankrupt is disqualified from engaging in estate agency work of any sort otherwise than as an employee of another person. For this purpose the employment of the bankrupt by another person does not include his employment by a body corporate of which he is a director or controller. [Note 10]  

 

25.31 Housing Act 1985 "Right to buy" council property 

There is a restriction on the "right to buy" under section 121 of the Housing Act 1985, the right to buy cannot be exercised if the person, or one of the persons, to whom the “right to buy” belongs has a bankruptcy petition pending against him/her, or is an undischarged bankrupt. [Note 11

 

25.32 Housing Act 1996 Schedule 1, Part 2 paragraph 4  - director/trustee of registered social landlord 

The relevant authority (either a local housing authority or a social services authority) may remove a director/trustee of a registered social landlord which is either a registered charity, an industrial and provident society, or a registered company,  where that director/trustee has been made bankrupt.[Note 12

 

25.33 Housing Associations Act 1985 – member of Housing Corporation  

The Secretary of State may remove members of the Housing Corporation if they are adjudged bankrupt (or their estate sequestrated). [Note 13

 

Legal matters 

25.34 Mental Capacity Act 2005 – Lasting power of attorney  (formerly enduring power of attorney) 

The Mental Capacity Act 2005 repealed the Enduring Powers of Attorney Act 1985, and introduced the lasting power of attorney to replace the enduring power of attorney.  The legal effect of an enduring power of attorney already made under the law current at the date of its creation is preserved.

Lasting power of attorney is a power under which the donor (the person conferring the power) confers on the donee(s) (the person(s) receiving the power) the authority to make decisions about the donor’s personal welfare, property or affairs, and includes the authority to make such decisions where the donor no longer has capacity. [Note 14]

The making of a bankruptcy order against the donor (person conferring power) revokes the lasting power of attorney so far as it relates to his/her property and affairs. [Note 15] An individual who is an undischarged bankrupt may not be appointed as a donee (recipient) of a lasting power of attorney in relation to the donor’s property and affairs, [Note 16] but bankruptcy does not terminate his/her appointment or revoke the power, in so far as his/her authority relates to the donor’s personal welfare. [Note 17

 

25.35 Solicitors Act 1974 – suspension of  practising certificate (solicitors)   

Section 15 of the Solicitors Act 1974 provides that any current practising certificate held by a solicitor is immediately suspended on the making of a bankruptcy order. The Law Society, on application, may lift the suspension of a practising certificate. There is no such restriction placed on practising barristers although as a matter of courtesy the Bar Council wish to be informed of any order made against members. Reference should also be made to paragraph 59.40 (barristers) and 59.60 (solicitors). [Note 18]  

 

Transport 

25.36 Air Passenger Duty Regulations 1994  

Regulation 7(2)(d) of the Air Passenger Duty Regulations 1994 requires that a person who is an undischarged bankrupt be disqualified from acting as a fiscal representative for an aircraft operator.  Written notice of his/her ceasing to act must be given to the Commissioners of HM Revenue and Customs, within 7 days of the disqualifying event. [Note 19]  

 

25.37 Goods Vehicles (Licensing of Operators) Act 1995 s 26 – operator’s licence  

A traffic commissioner who has issued an operator’s  licence may revoke, suspend or curtail it where an individual to whom that licence has been issued is made bankrupt. The official receiver should notify the commissioners at the local Traffic Area Office immediately the bankruptcy order is made. [Note 20]  

 

25.38 Public Passenger Vehicles Act 1981 - public service vehicle operators’ licence 

A public service vehicle operators’ licence or road service licence is terminated if the individual holding that licence is made bankrupt. [Note 21]  

 

25.38A MOT Authorised examiner

(Added August 2013)

A Motor Vehicles Test (MOT) authorised examiner shall cease to be authorised if he is adjudged bankrupt [note 21A].  This provision does not related to nominated testers. 

 

Tribunals 

25.39 Agriculture Act 1947 Schedule 9 - chairman of a land tribunal  

An undischarged bankrupt is disqualified from an appointment as chairman of a land tribunal and an existing chairmanship may be revoked upon the making of a bankruptcy order against the chairman. [Note 22

 

Utilities, public contracts 

25.40 Coal Industry Act 1994 Schedule 1 paragraph 1 - member of the Coal Authority  

The Secretary of State may remove a member of the Coal Authority if that member is made bankrupt. [Note 23]


 

25.41 Regional Development Agencies Act 1998, Schedule 2 paragraph 1 -  member of regional development agency 

The Secretary of State may remove a member of a regional development agency from that office if that person has been made bankrupt. 


 

Section B  

25.42  Repealed restrictions 

The following paragraphs list under grouped headings the disqualifications and restrictions repealed with regard to their application against an undischarged bankrupt. 

 

Disqualification from public office 

25.43 Greater London Authority Act 1999  

At section 21 of the Greater London Authority Act 1999, the disqualification against an undischarged bankrupt from being the Mayor or an Assembly member  of the Greater London Authority has now been repealed. [Note 24

 

25.44 Local Government Act 1972 - local government councillor 

Formerly an undischarged bankrupt could not hold office as a member in local government or local authority, nor could he/she hold this office within 5 years of receiving his/her discharge.  The position changed on 1 April 2004 with the coming in to force of Section 267 of the Enterprise Act 2002 which means that an undischarged bankrupt is not disqualified from so acting (consequently there is also no disqualification from so acting in the 5 years following discharge from bankruptcy).

This means that an existing member against whom a bankruptcy order was made could continue to act as a member. [Note 25][Note 26

 

Education 

25.45 Education (Foundation Body) (England) Regulations 2000 

An undischarged bankrupt is no longer disqualified from holding office, or continuing to hold office, as a member of a foundation body, as defined in Section 21(4) of the School Standards and Framework Act 1998 (a person can still be disqualified for holding (or continuing to hold) office as a member of a foundation body,  if his/her estate has been sequestrated and the sequestration has not been discharged, annulled or reduced). [Note 27][Note 28] 

 

Health and Medical 

25.46 Council for the Regulation of Health Care Professionals (Appointments etc.) Regulations 2002 

A person who is an undischarged bankrupt shall no longer be disqualified for appointment as a member of the Council for the Regulation of Health Care Professionals. [Note29][Note 30]

 

 

25.47 General Social Care Council (Appointments and Procedure) Regulations 2001  

A person who is an undischarged bankrupt is no longer disqualified from  appointment as chairman or as a member of the General Social Care Council. [Note 31][Note 32

 

25.48 Health Authorities (Membership and Procedure) Regulations 1996 

The restriction against an undischarged bankrupt being appointed to the post of chairman or member of a Health Authority was repealed as a result of the application of EA2002 (DfO:G)Order 2006. [Note 33][Note 34

 

25.49 National Health Service Appointments Commission Regulations 2001 (revoked and replaced by the

Appointments Commission Regulations 2006) 

Regulation 3(1)(b) of the The National Health Service Appointments Commission Regulations 2001 was amended by EA 2002 (DfO:G) Order 2006, such that an undischarged bankrupt is no longer disqualified from being appointed as chairman or as a Regional Commissioner of the National Health Service Appointments Commission. 

Subsequently, the National Health Service Appointments Commission Regulations 2001 have been revoked in their entirety and replaced by SI 2006 No.2380 – Public Health, The Appointments Commission Regulations 2006. There is no restriction imposed by these regulations against an undischarged bankrupt. [Note 35][Note 36

 

25.50 National Health Service Litigation Authority Regulations 1995  

Following the implementation of EA2002(DfO:G)Order 2006,  the National Health Service Litigation Authority Regulations 1995 [Note 37] are amended such that an undischarged bankrupt is no longer disqualified from being appointed as chairman or non-officer member of the National Health Service Litigation Authority. [Note 38]

 

 

25.51 National Health Service Trusts (Membership and Procedure) Regulations 1990 (SI 1990/2024) 

The restriction against an undischarged bankrupt holding the post of chairman or non-executive director of a National Health Service Trust  was repealed as a result of the application of EA 2002 (DfO:G) Order 2006.[Note 39][Note 40]

 

 

25.52 National Patient Safety Agency Regulations Regulations 3(1)(b)2001 

A person who is undischarged from bankruptcy is no longer disqualified from appointment as the chairman or as a non-officer member of the National Patient Safety Agency. [Note 41][Note 42]

25.53 National Treatment Agency Regulations 2001  

A person who is an undischarged bankrupt is no longer disqualified from appointment as the chairman or  as a non-officer member of the National Treatment Agency. [Note 43][Note 44

 

25.54 Primary Care Trusts (Membership, Procedure and Administration Arrangements) Regulations 2000 

A person who is an undischarged bankrupt is no longer disqualified from appointment to the chairmanship, or as a non-officer member, of a Primary Care Trust. [Note 45][Note 46

 

Legal matters 

25.55 Justices of the Peace Act 1997 - Justice of the peace 

EA 2002 repeals this section so that an undischarged bankrupt will no longer be automatically disqualified from being a Justice of the Peace and the position of such an individual will be left to the discretion of the Lord Chancellor (also see note below). 

Note : An individual who has been made bankrupt is disqualified from being appointed to or acting as a justice of the peace only in those cases where the petition was presented on or before 1 April 2004. [Note 47] [Note 48

 

Transport 

25.56 Transport Act 1981 

In paragraph 3(2)(a) of Schedule 2 of the Transport Act 1981, the office of director (of Associated British Ports) is no longer automatically vacated if the director is adjudged bankrupt. [Note 49

 

Tribunals 

25.57 Industry Act 1975 

A person who is an undischarged bankrupt is no longer automatically barred from being a member of a tribunal established by the Secretary of State under Schedule 3 to the Industry Act 1975, as a result of the amendment applied to that Act by EA 2002 (DFO:G) Order 2006. [Note 50] [Note 51

 

Utilities, public contracts

25.58 British Wool Marketing Scheme (Approval) Order 1950  

Formerly a regional member of the British Wool Marketing Board was automatically required to resign upon the making of a bankruptcy order against him/her. This provision [Note 52] was repealed by the Enterprise Act 2002 (Disqualification from Office: General) Order 2006 (referred to hereafter as EA2002(DFO:G) Order 2006). [Note 53

 

25.59 Land Drainage Act 1991 Schedule 1, Part 3 paragraph 9 - member of an internal drainage board  

Where formerly a bankrupt was not eligible to seek appointment as, or to be a member of, an internal drainage board and an elected member made bankrupt had to vacate office, this has now been repealed by the the relevant part of the Land Drainage Act 1991. [Note 54

 

25.60 Metropolis Water Act 1902  

Paragraph 7 of Schedule 3 (constitution and proceedings of Water Board) to the Metropolis Water Act 1902 [Note 55],  prevented an undischarged bankrupt from being  a member of the Water Board .   This provision was repealed by the EA2002(DFO:G) Order 2006. [Note 56]

 

 

[Back to Part 1] Restrictions imposed on bankrupts by insolvency legislation (including CDDA86)

[On to Part 3] Other considerations concerning restrictions against undischarged bankrupts