Comments from ACCA to the Department of Enterprise, Trade and Investment, October 2013.
ACCA supports the proposals within the consultation document, as they provide consistency throughout the UK, simplifying regulatory procedures, and bringing about an enhanced regulatory framework through clarity and proportionality.
We would encourage moves to reduce ‘red tape’ and remove redundant regulatory provisions. Moreover, we are not aware of any foreseeable costs that would make the proposals undesirable.
First proposal: to make amendments to Northern Ireland’s primary legislation dealing with insolvency which would result in the Department of Enterprise, Trade and Investment no longer carrying out the licensing of insolvency practitioners.
Q1. Do you have any comments or evidence on the costs and benefits set out in the attached Partial Impact Assessment (Annex 2)?
We note an apparent flaw in the analysis of option 2 on page 23 of the consultation document. Although the likelihood of no professional body being willing to act as a Recognised Professional Body is small, we feel this is worthy of comment. The document cites the disadvantage of retaining the power of the Department to specify bodies or persons to act as competent authorities is that a two-tier system would be likely to remain. However, in the absence of any Recognised Professional Bodies (under which conditions a new competent authority would be specified), there would only be one system (one ‘tier’) of regulation – that of the competent authority.
Q2. Do you agree that the competent authority provisions in Northern Ireland’s insolvency legislation should be repealed so that authorisation by a Recognised Professional Body would become the sole route to becoming entitled to practice as an insolvency practitioner in Northern Ireland?
ACCA works in the public interest, and supports measures to enhance the efficiency and rigour of regulation of insolvency practitioners (IPs). ACCA agrees that this proposal is a positive step for the insolvency profession as a whole, as it promotes the principles of better regulation – most notably consistency (in the way IPs are authorised and regulated) and proportionality. The proposed change would also give rise to an enhanced perception of independence of the Department in its oversight of the Recognised Professional Bodies.
We support consistency with measures taken by the Insolvency Service in England and Wales. Inconsistencies, at any time, between the authorisation of IPs in GB and those in Northern Ireland would undermine efforts to enhance regulatory systems in each location.
Second proposal: to give individuals wishing to practise as insolvency practitioners in Northern Ireland the option of being authorised to act solely in personal or corporate insolvencies as an alternative to being authorised to do both.
Q3. Do you agree with the proposal to make it possible to be authorised as an insolvency practitioner to act solely in personal or corporate cases?
Again, we recognise the importance of consistency between the available authorisations in GB and those in Northern Ireland. This is a simplification for IPs throughout the UK, as well as a positive step towards compliance with the EU Services Directive.
The proposed change will have a direct impact on the information required to be recorded by the Recognised Professional Bodies during the authorisation process, and the monitoring of IPs. However, we believe that the costs associated with such a change will be outweighed by the benefits of more focused education and experience of IPs, enhanced opportunities to access the insolvency profession, more detailed information about IPs being gathered, and consistency in authorisation throughout the UK. We therefore believe that this proposed change is in the public interest.
Third proposal: to repeal the legislative provision permitting individuals other than insolvency practitioners to act as nominees and supervisors in voluntary arrangements
Q4. Do you agree that the provision making it possible for individuals who are not insolvency practitioners to act as nominees and supervisors in voluntary arrangements should be repealed?
It appears that the legislation is defective in both GB and Northern Ireland, and currently not in use, as no bodies have been recognised for granting authorisation for individuals who are not insolvency practitioners to act as nominees and supervisors in voluntary arrangements. Repealing section 389A and article 348A at this time is particularly appropriate given the second proposal (to which we have given our support above).
Q1. If you are an insolvency practitioner currently licensed by the Department you are invited to state if you have any concerns about being able to obtain authorisation to practice if the Department ceases to provide this
This is not a question to be addressed by ACCA.
Q2. How many hours of study on average do you think would be saved by an individual who opted not to take the Joint Insolvency Examination Board examinations in corporate insolvency?
We accept the analysis of the benefits of this proposal provided in the consultation document. However, we feel that this question can only be addressed meaningfully by the Joint Insolvency Examination Board.
Q3. If you are an insolvency practitioner currently licensed by the Department do you have any professional indemnity insurance?
This is not a question to be addressed by ACCA.
Q4. If you are an insolvency practitioner currently licensed by the Department what do you estimate would be the cost to you of either taking out or topping up professional indemnity insurance to meet the requirements of the Recognised Professional Body to whom you would intend to apply for authorisation if the Department ceases to provide this?
This is not a question to be addressed by ACCA.
Q5. Do you foresee any costs which we have not identified?
In short, we do not foresee any further costs. However, the consultation document makes the assumption that the Recognised Professional Bodies will all opt to provide partial authorisation of IPs. If this was not the case, there would be additional costs (to IPs and professional bodies) as IPs were required to transfer to become authorised by an alternative Recognised Professional Body.
We note that the four IPs who are currently authorised by the Department may incur costs associated with enhanced professional indemnity insurance arrangements. Professional indemnity insurance is necessary to protect the public, and the Recognised Professional Bodies regulate their members in the public interest. Therefore, we believe that any additional costs to IPs incurred in bringing their professional indemnity cover in line with the requirements of a particular body are outweighed by the benefits of protection for the public. We take a similar view concerning the potential cost to four IPs of being subjected to a wider range of sanctions under the Recognised Professional Bodies than currently under the Department.
Q6. If you are replying on behalf of a Recognised Professional Body please state if you foresee opting to provide partial authorisation involving your body in any costs
The proposed change will necessitate the collection of different information to that currently gathered during the process of authorisation or the renewal of authorisation. This will give rise to a one-off cost in amending procedures and providing information to individual applicants (and potential applicants). There will also be an impact on the cost of monitoring IPs, brought about by an anticipated increase in individuals authorised, and an increase in monitoring visits that are very specific and relatively brief (and which may result in the less efficient use of compliance officers’ time).
Q7. If you think that any costs would arise from a decision to provide partial authorisation please provide an estimate of the amount.
Additional costs anticipated have been described under Q6 above. We would anticipate that these will be low in early years, rising as more IPs seek authorisation in either solely individual insolvencies or solely corporate insolvencies. As the point at which the increases will become significant is some time into the future, we are unable to estimate such costs at this time. However, concerning the one-off costs of providing partial authorisation, we would not disagree with the broad estimate provided in the consultation document on page 31.