This is a summary of the requirements for PII, FGI and bonding to be licensed as an insolvency practitioner by ACCA. Full details are available in ACCA's global practising regulations 2003 and in ACCA's Practice Information handbook. You can find a link to the global practising regulations in the Related Links section on the top left side of this page.
New statutory regulations are being drafted that may come into effect before ACCA's rules are next amended in January 2006.
You are advised to look for articles in ACCA's Insolvency Newsletter, Dear IP, R3 technical bulletins and other periodicals when published.
An insolvency practitioner licensed by ACCA must hold PII cover on an 'each and every claim' basis in respect of all civil liability incurred in connection with the conduct of his business, including any partners and directors. The level of cover required in determined by the greater of the practitioner's total income for the previous accounting year and 25 times his largest fee (single client/estate, not single invoice). The minimum amount is £50,000, but the following rules apply:
Total income up to £200,000;
The greater of £50,000 or 2.5 times the total income, or 25 times the largest fee.
Total income between £200,000 and £700,000;
The greater of £300,000 plus the total income or 25 times the largest fee.
Total income over £700,000;
The greater of £1million or 25 times the largest fee.
Each practitioner who is in partnership or has fellow directors in an incorporated business or employs full-time or part-time staff must also obtain FGI, which is often available within PII cover. FGI cover must not be less than £50,000 in respect of each and every claim.
The uninsured excess in respect of a practitioner's PII and FGI must not be greater than 2% of the limit of indemnity or £20,000 per principal in respect of each and every claim, whichever is the lesser.
Regulation 12 of the Insolvency Practitioner Regulations 1990 (as amended) requires an insolvency practitioner to obtain a general bond of £250,000 that complies with Part 1 of Schedule 2 of the regulations. The original enabling bond must be lodged with ACCA on application for a licence or on application for renewal of an existing licence.
Specific Penalty Bond
Regulation 12(1) of The Insolvency Practitioners Regulations 1990 (as amended) requires an insolvency practitioner to obtain a specific penalty bond in respect of each appointment for an amount not less than the value of the insolvent estate's assets as estimated in accordance with Schedule 2 of the Regulations.
Thsi is subject to a minimum amount of £5,000, and a maximum amount of £5m and to forthwith increase the amount of the specific penalty bond where he forms the opinion that the value of the insolvent estate's assets is higher than the amount of the existing bond.
Regulation 15A (1) of the Insolvency Practitioners Regulations 1990 (as amended) requires an insolvency practitioner to submit to his authorising body each month a bordereau containing details of any cases to which he was appointed to act as an insolvency practitioner during that month and where he obtained his release or discharge during the month, although details may be included in a subsequent bordereau, but no later than the bordereau relating to the second month after the date of appointment/release.