Under existing regulations, some insolvency practitioners (IPs) are directly regulated by the Secretary of State for Business, Innovation and Skills.
But this group – consisting of approximately 60 IPs – are perceived by some critics as representing a ‘conflict of interest’.
That is because the government is also the oversight regulator, a problem compounded because the Business Secretary cannot impose sanctions beyond removing wayward IPs’ authorisation.
By comparison, independent regulators can impose sanctions including monetary fines and restrictions on the types of work the IP can continue to carry out.
Under the draft version of the bill, the 60 or so IPs currently regulated by the Business Secretary will transfer to one of seven independent bodies, which currently regulate roughly 1,700 IPs.
Meanwhile, in future, IPs may be permitted to qualify for partial authorisation, such that they are permitted to deal with only personal insolvency, or only company insolvency.
The legislation defines either instance as an example of ‘partial authorisation’, whereas ‘full authorisation’ allows practitioners to work on both company and individual insolvency.
In principle, this may mean a greater supply of practitioners with close knowledge of one area of insolvency, but not of the other – potentially increasing competition within each specific discipline.
Speaking about the bill in general, minister for business and enterprise Michael Fallon said: “Our new growth duty is an important step in changing the mindset in Whitehall and beyond to focus relentlessly on helping honest businesses to grow.”