Insolvency trade body R3 has slammed the government’s decision to include proposals for partial insolvency practitioner (IP) licenses in its Deregulation Bill.
The proposed ‘partial license’ would introduce two types of license that would allow IPs to work on purely corporate or purely personal insolvency cases.
A consultation on partial licenses was also launched yesterday following the proposals being put to the House of Commons.
Giles Frampton, vice president of R3, believes partial licenses would be confusing and add unnecessary red tape to insolvency processes.
Frampton said: “Partial licences could prove confusing for the businesses, individuals and entrepreneurs that turn to IPs for advice. They need to know from the start that an IP will be able to help with all their problems.
“It is difficult for an IP to judge if the case is purely corporate or personal until they have actually been appointed. Only a thorough examination by a fully qualified IP will properly identify the issues.
“Because knowledge of both corporate and personal insolvency matters is frequently necessary when advising clients, the savings may prove to be illusory.”
“We understand that the government is keen to increase competition and reduce costs, but partial licences are simply not the way to do this. The benefits of the government’s proposals are dwarfed by the drawbacks.”
Frampton is also concerned about the consultation launched yesterday.
He said: “These proposals have yet to be properly consulted on, so it is disappointing to see them already in the Bill. Hopefully, the Government will listen to the profession and amend the Bill once the consultation is complete.”
The Deregulation Bill, read for the first time in parliament yesterday (23 January), with a second reading due on Monday 3 February.