Government ‘to take minister out of insolvency registration process’

New legislation will bring an end to the role of the secretary of state as a direct regulator of insolvency practitioners, a minister has said.

In a written statement following a consultation on the sector’s regulatory regime established earlier this year, consumer and postal affairs minister Edward Davey said the new legislation would “remove the secretary of state from the direct authorisation of insolvency practitioners, to ensure that the powers of the Secretary of State as oversight regulator are appropriate and to ensure that the objectives of the regulatory regime are clear”.

Mr Davey noted that the broad consensus found in the responses has been that the current arrangements have worked “reasonably well” and that self-regulation has benefitted from applying the expertise of those who know the industry best.

However, he said, the Office of Fair Trading had raised concerns about the level of returns unsecured creditors have gained from insolvency administration firms, as well as the fairness of charging structures.

And while suggesting there is merit in the notion of having a single regulator for the sector and not ruling such a move out, the minister said he wanted to hold discussions with the industry to help it reach the government’s objectives without the same level of radical change.

Such aims include enhancing the overall levels of transparency and customer confidence, Mr Davey stated.

Responding to the written statement, president of insolvency service professionals’ body R3 Frances Coulson broadly welcomed the statement and the acknowledgement that the system of regulation in place at present works quite well.

She stated: “Overall the UK’s insolvency regime is not in need of radical reform,” but pledged to work with the government on measures to address the areas of concern raised by the consultation and ensure the sector is ” transparent, consistent, accessible, independent and accountable”.