Insolvency trade body R3 has today (25 February) increased its opposition to the Government’s proposal to offer a partial licence system for insolvency practitioners.
As part of the Deregulation Bill, the proposed ‘partial license’ (Clause 10) would introduce two new types of license allowing IPs to work wither only on corporate or only on personal insolvency cases.
Andrew Tate, chairman of the R3 Smaller Practises Group Committee, today gave evidence to the Treasury Select Committee to extol the virtues of IPs having knowledge and experience of both corporate and personal insolvency spheres.
When questioned on the subject, Tate said R3 believes Clause 10 is “simply misconceived”.
Tate explained: “We do not believe partial licenses are beneficial to businesses and we just don’t believe that this is a clause which should be in the Bill.
“This is the Deregulation Bill and we do not believe that this clause will be deregulatory. We believe it will add to regulation – the mere fact that there are going to be three licenses for insolvency practitioners than one will add regulation.”
Tate claimed that a partial licensing system would serve to “dumb down” the insolvency industry, having a negative impact in terms of quality, and stated that 90% of smaller firm R3 members would not take up a partial license should it be brought into effect.
Using the analogy of a GP seeing a patient, Tate extolled the virtues of IPs being able to advise clients with the benefit of experience and knowledge of corporate and personal insolvency.
Tate said: “If you went to see a GP with a pain in one part of your body, you would expect the GP to be able to give you general advice. They may refer you to a specialist ultimately and that’s exactly the same for insolvency practitioners.”
In response to today’s committee meeting, an Insolvency Service spokesman said: “The measures in clause 10 of the Deregulation Bill are nothing new, indeed we consulted on these changes as far back as 2010.
“We remain convinced that allowing insolvency practitioners to specialise will increase competition in the market, which can only benefit end users.”