Statement from the APPG on Fair Business Banking: Back Bench MPs Call for Evidence in City Law Firm Review of Insolvency Industry - 06/01/21

The All-Party Parliamentary Group on Fair Business Banking, supported by City law firm Humphries Kerstetter LLP, is to conduct an in-depth investigation into standards in the UK insolvency profession. The work is aimed at building on and supporting Governmental studies into regulation and standards in the industry, including the ongoing review of the regulatory system for the industry. As part of its six-month project the APPG has already calls for evidence from the main players in the industry including the major accountancy firms, the regulatory bodies and the Insolvency Service. The APPG is now asking for anyone else with information about conduct and standards in the corporate insolvency world to submit information for consideration in any final report.

Kevin Hollinrake MP, Co-Chair of the APPG, stated: “A properly functioning insolvency industry is key to any successful economy. In recent years there have been a number of high-profile failures in the insolvency industry. The APPG has also received its fair share of complaints about the system. This is why we thought now would be a good time to conduct our review, identify any failures and suggest practical ways they might be addressed.”

Given the nature of the APPG a key focus of the investigation is likely to be on the relationship between insolvency practitioners and the lending institutions that have the power to appoint them. The APPG has received a number of complaints from business owners that the current system does not do enough to protect their companies when they have fallen into insolvency. Avenues for redress in this area are limited in practice with no independent regulator or ombudsman in place to oversee the industry and very high hurdles in place for anyone seeking to obtain justice through the courts.

James Russell, partner at Humphries Kerstetter said: “All industries have stories of individuals or companies behaving badly. The insolvency profession is no different. But this needs to be put into proper context. As a City law firm we have seen conduct that falls below what should be expected. What we are interested in exploring is whether such behaviour is indicative of a wider, systemic problem. If these problems are endemic, we look forward to working with the APPG to find ways to address them for the benefit of the insolvency industry and the wider economy.”

As part of the research phase of the investigation the APPG is sending out a call for evidence. Anyone who feels they have information relating to corporate, rather than individual insolvency which might be relevant to the investigation is invited to email setting out a brief summary of the matter.