An insolvency practitioner is licenced by one of several authorising bodies, ie Institute of Chartered Accountants, the Law Society, the Insolvency Practitioners Association, etc.
Until relatively recently the Insolvency Service operated a rota system whereby IP’s were appointed from that rota, as Trustee in Bankruptcy, on most bankruptcy cases. However, in a determined attempt to increase the return to creditors and reduce the administrative costs of a bankruptcy, the Insolvency Service began keeping more of the smaller asset bankruptcy cases ‘in-house’, thus avoiding the appointment and fees of a Trustee in Bankruptcy. This has caused many IP’s, particularly from smaller practices, to complain.
Whilst we have some sympathy with those IP’s who carried out their work diligently, with regard to both debtor and creditor (rather than just taking as much as possible by way of fees for themselves), in our opinion the blame for this loss of business for IP’s can be laid squarely at the feet of their authorising bodies. Had they shown any interest or willingness to punish those IP’s who abused their position by showing lack of objectivity, failing to follow ethical guidelines, proper case progression, racking up outrageous fees, often well in excess of the actual debts of the bankruptcy, then we would not have the situation we have today.
When I brought the case highlighted above to the notice of a senior member of the Insolvency Service, his response was ‘and they wonder why we are keeping more cases ourselves’. And so say all of us…..