Principles for Monitoring of insolvency practitioners

1 Introduction

The Insolvency Service as an authorising body and the Professional Bodies recognised by The Secretary of State for the purpose of authorising insolvency practitioners (together referred to herein as "the Bodies") have agreed a Memorandum of Understanding which has been signed by all the Bodies. The Memorandum of Understanding requires the Bodies to subject authorised practitioners to monitoring in accordance with a Standard for Monitoring to be agreed between the Secretary of State and the Bodies.

2 Purpose of Monitoring

The purpose of monitoring is to enable each of the Bodies to make an objective assessment of the conduct and performance of practitioners authorised by it and to ascertain whether the practitioner is, and continues to be, fit and proper.

3 Achieving the Purpose

3.1Responsibility

It is the responsibility of each of the Bodies to ensure that the practitioners authorised by it are monitored in accordance with this Standard. This responsibility will remain even if the monitoring is carried out by a third party.

3.2 Desktop Monitoring

Reasonable steps should be taken to obtain all available information from insolvency practitioners and from sources independent of practitioners to assist in achieving the purpose of monitoring. Information so obtained shall be considered on the renewal of authorisations and when determining the frequency of monitoring visits.

3.3 First Appointments as an Office Holder

When an authorised practitioner begins to accept appointments as an officeholder, the authorising body should arrange an early monitoring visit unless it is satisfied that such a visit is unnecessary.

3.4 Monitoring Visits

Every practitioner holding at least one appointment as an insolvency officeholder shall be subject to monitoring visits. The frequency of visits shall be determined by each of the Bodies having regard to the following:-

3.4.1 The period between monitoring visits is normally expected to be 3 years.

3.4.2 If satisfactory risk assessment measures are employed, the gap between visits may be extended but must not exceed 6 years.

3.4.3 Targeted interim visits should be made if a Body becomes aware of concerns about a practitioner’s activities. Such concerns may arise from previous monitoring visits, from desktop monitoring, from complaints or otherwise.

A practitioner who does not hold any appointments as an insolvency officeholder, and has not held such appointments in the relevant period will not normally be subject to monitoring visits. However such a visit may be undertaken if the authorising body considers it is appropriate to do so. The relevant period for this purpose is the period since the issue of the authorisation or the previous monitoring visit, whichever is the later.

4 Key Monitoring Issues

4.1 Compliance

Steps should be taken to check satisfactory levels of compliance with all relevant aspects of insolvency law and practice including the following legislation:-

English

The Insolvency Act 1986 and all subsidiary legislation including the Insolvency Rules 1986, the Insolvency Regulations 1994 and The insolvency practitioners Regulations 1990 (all as amended)

The Company Directors Disqualification Act 1986 (as amended).

Other relevant legislation.

Scottish

The Bankruptcy (Scotland) Act 1985 and the Bankruptcy (Scotland) Act 1993, the Insolvency Act 1986 and all subsidiary legislation, including the Insolvency (Scotland) Rules 1986 and The insolvency practitioners Regulations 1990 (all as amended) The Company Directors Disqualification Act 1986 (as amended).

Other relevant legislation

Northern Irish

The Insolvency (Northern Ireland) Order 1989 and all subsidiary legislation including the Insolvency Rules (Northern Ireland) 1991, the Insolvency Regulations (Northern Ireland) 1996 and the insolvency practitioners Regulations (Northern Ireland) 1991 (all as amended)

The Companies (Northern Ireland) Order 1989 (as amended)

Other relevant legislation

Together with:-

Common Law.

The bye-laws, rules, regulations and continuing professional education requirements of the Body.

Bonding requirements.

4.2 Professional Competence

Checks on professional competence should include, but not necessarily be restricted to, a review of the following:-

4.2.1 The systems and controls employed by the practitioner to ensure the proper conduct of their work.

4.2.2 The ability of the practitioner to carry out the work which they undertake. This should include an examination of the facilities available to the practitioner, and the competence and suitability of their partners, fellow principals, staff and sub contractors and the suitability of professional advisers, agents and contractors.

4.2.3 The level of control exercised by the practitioner in cases where they are the office holder.

4.2.4 The financial systems employed by the practitioner including a check on the way in which remuneration and disbursements are authorised and drawn and receipts and payments are handled and accounted for.

4.2.5 Whether there are regular occurrences of undue or unwarranted delays in dealing with the officeholder’s duties or with correspondence.

4.2.6 The procedures for and manner of dealing with complaints.

4.2.7 Any undue influences to which the practitioner is exposed including financial, emotional, professional or those exerted by significant work providers.

5 Practices with Authorisations from more than one Authorising Body

It is not unusual for a firm or practice to include partners and staff who are authorised by different authorising bodies. In these circumstances the following will apply:-

5.1 Wherever practical the authorising bodies or their monitoring agents should liase with a view to undertaking a combined monitoring visit.

5.2 If there is no joint visit and a monitoring visit to one practitioner highlights shortcomings in the work undertaken on cases by a practitioner authorised by a different Body, a note of those shortcomings should be provided to that Body whether or not the practitioner is an office holder.

6 Joint Appointments

Where a monitoring visit to a practitioner highlights shortcomings in the work undertaken on cases by a joint appointee who is licensed by another Body, a note of those shortcomings should be provided to that Body as soon as possible.

7 Monitoring Reports

A written report should normally be provided to the practitioner and the Body within 30 working days of the conclusion of the monitoring visit. Any serious matter for concern shall be reported to the Body as soon as possible.

Reports should be sufficiently detailed to assist each of the Bodies to make an objective assessment of the conduct and performance of the practitioner authorised by it and to ascertain whether the practitioners are, and continue to be, fit and proper.