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Regulators and IPs at loggerheads with creditors over industry reforms 21 December 2011

 

The Insolvency Service (IS) has published a summary of the views received about the projected creation of an independent complaints body.

It stated IPs and industry regulators were “generally not persuaded” fundamental changes to the current regime were necessary.

But creditors and their representatives argued a single regulator would be “the most effective way to address many of the concerns identified”.

The consultation followed a separate report by the Office of Fair Trading (OFT) in June 2010 which stated the existing framework suffered from a lack of trust.

The consultation summary reported: “The majority of regulators and IPs argued that insufficient evidence had been provided that the present regime was failing to the extent that it required substantive reform.

“These respondents also questioned the evidence and recommendations made in the report published by the Office of Fair Trading (OFT).”

However, there was “widespread” support from creditors for a “simplification” of the present structure and a reduction in the number of regulators.

The summary read: “Creditors argued that there was a genuine need for reform, and that there are issues beyond problems of perception, particularly in relation to complaints handling, that need to be addressed.

“There was general agreement amongst creditor respondents that the present regime is too complicated, and is inconsistent and ineffective.”

Creditors were also “strongly supportive” for IPs' fees to come under scrutiny but IPs and regulators feared the move could “encourage vexatious complainants”.

But there was widespread support overall for the creation of a single portal to receive complaints as well as for the IS to stop acting as a direct regulator of IPs.

Yesterday, employment minister Edward Davey MP, said he could “see the merits” of creating an independent single regulator and admitted the idea had not been ruled out.

 

 

 

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