Member Article

Government release Insolvency Service report

Under-resourcing could impact stakeholder confidence in the Insolvency Service, according to a Department of Business Skills and Innovation (BIS) report, issued on Wednesday.

The report says resource constraints have affected the investigatory and enforcement regime within the Insolvency Service, making it harder to examine and react to companies that have gone bust.

BIS said the service must come up with a strategy to promote investigations and enforcement so that stakeholders are better informed and potentially more confident.

Employee levels within the service were also of concern. Commenting on the report, BIS Select Committee chairman, Adrian Bailey, MP, said: “The high level of service maintained by staff is a testament to them.

“Good staff are not a substitute for adequate resource, however. The Insolvency Service has the first; it must now prove it has the second.”

BIS criticised the funding model in place in the Official Receiver Service, which administers court insolvencies, and said it was not fit for purpose in the current economic climate.

The report also expressed concerns over pre-pack administrations, which Mr Bailey said needed “greater transparency, higher levels of compliance, and a stricter regime of sanctions.”

Suggestions made by the Insolvency Service to increase the administration fee for going bankrupt were welcomed by the BIS report, if the bankrupt individual had received debt relief of £30,000 or above.

The fee controversially rose from £75 to £525 in June 2011, with the additional court fees added on to this figure.

BIS also suggested administration fees should be made payable in staggered installments to make it easier to pay back.

The report also backed reforms to the complaints system, to create a standardised and simpler service to provide a clearer picture of work carried out by insolvency practitioners.

Mr Bailey concluded: “The work of Insolvency Practitioners takes place in difficult circumstances. Common standards and a simplified complaints system can help provide a clearer picture and a deeper understanding of this work.”

This was posted in Bdaily's Members' News section by Miranda Dobson .