Respondent The

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					                   The Insolvency Practitioners Regulations 2005 (draft) and
                    proposed insertion into the Insolvency Regulations 1994

                          Summary of Responses to the Consultation

Draft Regulation      Respondent           Comment(s)

1                     KPMG                   It would be useful to have the phrase “act as an
                                              insolvency practitioner” defined as the term is used
                                              throughout the regs.
2(3)                  PWC                   Reference to paragraph (1) should be to paragraph (2)
3                     OSAG                  Can “sequestration or bankruptcy” be inserted between
                                              “insolvency” and “of a person” as personal insolvency
                                              is not a term in Scottish Law
4                     PWC                   Not sufficiently clear that this applies only to SoS
                                              authorised IPs
                                            In the pre-amble to the regulation, it would be clearer
                                              if the word individual were replaced with the word
4                     ICA                  Matters to determine fit & proper could include
                                            Failure to comply with the terms of the SIPS.
                                            Accepting appointments without consideration as to
                                              how the consequential statutory duties will be carried
                                              out within the known limitations of funding.
                                            Failure to carry adequate Professional Indemnity
                                              insurance in accordance with the levels that the
                                              Secretary of State may from time to time require.
                                            Employing a person within their practice that has
                                              previously been found not to be a fit & proper person
                                              to hold a licence.
4(e)                  ACCA                  How is the fitness and propriety relating to the
                                              operation of an insolvency practice in situations where
                                              the applicant has yet to commence such a practice, to
                                              be judged?
5                     ICAEW                 Agree that it is unnecessary to require qualifications
                                              other than the JIEB
5(5)(a) and (b)       ACCA                  Definition of “associate(s)”?
                                            Cross reference to section 435 Insolvency Act 1986.
5(6)                  ACCA                  How is the applicant‟s command of English language
                                              to be judged?
6(1)                  PWC                   Suggest that the words “ … as an alternative to the
                                              requirements set out in regulation 5 … ” be deleted.
6(2)(b)               PWC                   Does not provide for the SoS to exercise discretion in
                                              re: CPD although the supporting notes to the
                                              consultation say that on occasion discretion can be

Draft Regulation      Respondent          Comment(s)

6(2)(b)               Ince and Co           Supports the principle of CPD
                      (Solicitors)          108 hours in three years (average 36 hours per year) is
                                             onerous in comparison to LS requirement of 16 hours
                                             each year
6(3)(b)               KPMG                 No reference to technical research or participation in
                                             technical committees. Narrower than ICAEW
                                             guidance on CPD.
                      IPA                  Note the continuing experience requirement has been
                                             extended to advisory and regulatory work.
                      ICAEW                Welcome the wider range of experience
                                           Need to clarify that CPD is for all, regardless of
                                             whether an office-holder or not
9                     KPMG                 The “complaints” paragraph 9(1)(c) is too widely
                                             drafted and potentially very onerous.
                                           Annual return submission period should be two
                                             months rather than 31 January.
9(1)(c)               R3                   Complaints requirements unnecessary and should be
9(1)(c)               Grant Thornton UK    DTI licence holders only – what is meant by
                      LLP                    “complaint”
Complaints            Milsted Langdon      “Tremendous administrative burden”
Returns               Milsted Langdon      The requirement to submit number of hours worked in
                                             relation to a case by an officeholder in each case is
Annual return         Freeman Jones        Do not support time records aspect
                      IPA                  What is the purpose of the new requirement for SoS
                                             authorised IPs to submit annual returns particularly in
                                             respect of hours worked on cases and complaints?
                                           Will SoS authorisation holders be required to provide
                                             other information under administrative direction?
11(1)                 Debt Solutions      Requirement for maintenance of time records re: an IVA
                                          where basis for IP fees are fixed or agreed is:
                                           Unnecessary
                                           Could affect ability of IPs to maintain low costs

11 / Sch 3            Grant Thornton UK      What happens where there is a change in practitioner?
                      LLP                     Is the record personal to the IP or to the case?
                                             The case record appears to serve no useful purpose.
11 – 13 (and Sch 3)   KPMG                   Opportunity should be taken to remove the
                                              requirement to maintain case record.
11 and Sch 3          R3                     Case record serves no purpose. All information is
                                              available elsewhere

Draft Regulation      Respondent          Comment(s)

Case Record           ACCA                   Accepts principle that it‟s necessary to keep
                                              information about a case and its administration
                                             Sch 3 provides minimum information.
                                             Standard setting on controlling/managing cases is
                                              appropriate to regulate.
                                             Should be principles based
                                             Requirement for case record too prescriptive.
                                             “ACCA suggest an approach whereby IPs are required
                                              to maintain sufficient information about a case to
                                              enable them to know when specific events have
                                              occurred. [Such information need not be] … capable
                                              of being produced in the form of a separate report”.
14                    KPMG                   SoS should only be able to inspect and take copies of
                                              relevant records within two years of the date of
                                              vacation of office by an IP.
15                    KPMG                   Restriction detailed in the accompanying notes should
                                              be reflected in the wording of the draft regulation.
                      IPA                    Removal of educational requirements
                                             “ … Represents yet a further step away from the
                                              requirements of the RPBs …”
Sch 2 Parts 2 and 3   Law Society            Not clear what view should be taken of assets of a
                                              company subject to a floating charge.
                                             Is the decision in re: Spectrum relevant.
                                             No requirement to bond for payments made under an
                                              IPO or IPA
                                             Position as regards payments promised to a VA by a
                                              third party is unclear because they are not “the
                                              insolvent‟s assets”. It seems that they are to be
                                             Do we need to re-visit the term “insolvent estate”
                                              because some „assets‟ aren‟t actually the insolvent‟s
                                              assets e.g. antecedent recoveries, but rather comprise
                                              in the estate. Does this distinction need to be made?
Sch 2 Part 1 para 1   ACCA                   No specific reference made in def of “the insolvent” to
Sch 2 Part 2 para     Grant Thornton UK      Para 2(1)(a) fraud or dishonesty
2(1)                  LLP                    Para 2(1)(b) fraud and dishonesty.
Sch 2 Part 2 para     ACCA                   “Or persons” needed between “person” and
2(1)(b)                                       “committed”
Sch 2 Part 2 para     KPMG                   Reduces from two months to one, the period for
2(2)(c)                                       reporting an appointment to the insurers. Should be
                                              left as two.
Sch 2 Part 2 para 2   ACCA                   Should read either “ … is not submitted in accordance
(2)(d)                                        with the time-limits” or “… is not submitted within the

Draft Regulation       Respondent      Comment(s)

Sch 2 Part 2 para      PWC                “Within” immediately preceding “time limits” should
2(2)(d)                                    be replaced with “with”.
Sch 2 para 2(2)(e)     ACCA               Approach should be adopted whereby IPs bond on
                                           estimated value of assets and increase bond when
                                           funds realised exceed the level of bond (since risk is
                                           not „crystallised‟ until funds are received from asset
                                          Draft regs silent on time-scale within which the
                                           revised cover schedule should be submitted to the
                                          Regs should stress importance of obtaining
                                           appropriate level of specific penalty bond.
                                          Retrospective cover is not available.
Sch 2 Part 2 para      PWC                Doesn‟t cover all cases e.g. administrator to supervisor
2(4)                                       of CVA.
                                          If rationale is that, where appointed in successor
                                           capacity, assets do not need to be bonded for again,
                                           then it should be made clear that if partnership assets
                                           are bonded, there should be no requirement to bond
                                           the same assets again in the individual partners‟
Sch 2 Part 2 para      ACCA               First sentence should be “ sub-paragraph (2)(f)”
Sch 2 Part 2 para      R3                 List should include administrator to supervisor
2(4)                                      Could this „list‟ not be provided in general terms? i.e.
                                           “where a practitioner acts in proceedings immediately
                                           succeeding prior proceedings in which he also acted
                                           …”. IP would still need to advise surety of change of
                                           insolvency process.
Sch 2 Part 2 para 3    CP Associates      Does this mean that where there is a floating charge
                       Limited             the only amount to be bonded is the assets available to
                                           preferential creditors and, if applicable, any assets (inc
                                           prescribed part) available to un-secured creditors and
Sch 2 Part 2 para      PWC                Not clear if funds, which are available to preferential
3(a)                                       creditors and unsecured creditors by virtue of the
                                           prescribed part ahead of floating charge-holders, will
                                           require bonding.
Sch 2 Part 2 para      R3                 Does “charged include “subject to a floating charge”?
Sch 2 Part 2 paras 3   ACCA               Amount is too specific and should be in terms “ at
and 4.                                     least the value of” rather than “equal the value of an
                                           insolvent‟s assets” thus avoiding a breach of regs for
                                           failing to increase bond level when est. value increases
                                           by, say £10.
                                          Bonds are by reference to bands, regs should mirror

Draft Regulation      Respondent        Comment(s)

Sch 2 Part 2 para 4   CP Associates        Dictates bonding at a significantly higher level than
                      Limited               necessary. Amount received in first year of a VA will
                                            only be a portion of the amount due over the lifetime
                                            of the arrangement but will have to bond for the
                                            anticipated full amount.
Sch 2 Part 2 para 4   PWC                  Doesn‟t make clear that in an IVA it‟s still the whole
                                            of the assets (i.e. the car, the house and the aggregate
                                            sum of contributions) that needs to be bonded for.
Sch 2 Part 2 para 4   KPMG                 Amounts to be paid in an IVA not always specific i.e
                                            can be presented in percentage terms. Schedule needs
                                            to be more specific and workable.
                                           Note: Nominees rarely have assets under their control.
Sch 2 Part 2 para 4   ACCA                 What is meant by “control”?
                                           Is bonding required for assets left in the control of the
                                           Does supervisor need to bond for „prospective‟ equity?
                                            e.g. when a property is re-valued in the third year of an
Sch 2 Part 2 para 4   R3                   The amount of bond should be limited to the max
                                            amount, which the supervisor will hold at any time
                                            during the arrangement.
Sch 2 Part 2 para 4   Milsted Langdon      There will be significant costs in bonding for the value
                                            of contributions of which receipt is anticipated in the
                                            life of an arrangement when compared to what might
                                            actually be received in any one year.
                                           The „full bond‟ is not actually required until the end of
                                            the life of the arrangement. Why pay for it
                                           What is proposed does not reflect the risk to
Bonding levels        Freeman Jones        Should mirror the fact that annual bonding is now „in‟
                                            and consequently bonding should be for the level of
                                            assets held/realised by an IP in that year. ‟
Specific penalty      ACCA                 Treatment of secured assets has been clarified.
bonds                                      Treatment of interest on assets realised and whether
                                            IPs should bond for funds in hand or for total
                                            realisations needs to be clarified.
                                           Interest received does not comprise an insolvent‟s
                                            assets and so, in this draft, doesn‟t need to be bonded
                                           The regulations should be crystal clear that the level of
                                            the specific penalty bond should be for the total
                                            realisations made or anticipated, in respect of an
                                            insolvent‟s assets.

Draft Regulation       Respondent          Comment(s)

Bonding                IPA                    Clarification of bonding in relation to charged assets
                                               and trust property, for VAs and terms, is welcomed, as
                                               is the fact that electronic submission of documents etc
                                               is not inhibited by the draft regulations.
Bonding                IPA                    Need for definition/clarification of what constitutes the
                                               making of a claim in relation to general and specific
                                               penalty bonds. (Possibly to be carried forward with the
                                               insurers rather than a matter for the regulations).
Bonding                IPA                    Has consideration been given to, or are there grounds
                                               for, increasing the general penalty sum above
Bonding                ICA                    Cover should be increased, for specific and enabling
                                              For enabling bonds to fund successor IP‟s
                                               investigations and recovery work for the IP‟s practice
Bonding                Alexander Forbes       Regulations should clarify the claim limit applies to all
                                               insolvency appointments and the time within which
                                               claims can be made
                                              Clarification of specific penalty levels
                                              Wording amendments to allow electronic submissions
                                               of information

Sch 2 Part 2 para 7    Grant Thornton UK      Would read better if (a) and (b) were reversed and the
                       LLP                     joining “and” were replaced by “or”.
Sch 2 Part 2 para 7    OSAG                   In paragraph 7(a)(ii) the word “preliminary” should be
                                               deleted I think and the words “of the debtor‟s affairs”
                                               inserted after the word “statement”. References to the
                                               preliminary statement were repealed from the
                                               Bankruptcy (Scotland) Act 1985 and section 20 refers
                                               to a statement of the debtor‟s affairs
Sch 2 Part 3 para 8    ACCA                   Triplicates requirement to maintain record of specific
Sch 2 Part 3           ACCA                   Is specific reference to partnerships required?
10(1)(2) and (3)
Sch 2 Part 3 para      ACCA                   In penultimate line “to” between “relation” and “any”
Sch 2 Part 3 para 12   Grant Thornton UK      What of position where an IP ceases to act but never
(1) (c)                LLP                     actually gets his release?
Sch 2 Part 3 para      ACCA                   What is timescale for providing authorising body with
12(1)(c)                                       cases where IP discharged/released?
Sch 3                  OSAG                   citation of the regulation under which the Schedule is
                                               made – should probably be regulation 11.nstead of 12
Sch 3 para 2           ACCA                   Does the reference to identifying numbers being
                                               issued by RPBs mean that INSS will no longer issue
                                               IP numbers?

Draft Regulation   Respondent      Comment(s)

Sch 3 para 11(b)   OSAG               the words “(including the date of certificate granted by
                                       the Accountant in Bankruptcy)” which were present in
                                       paragraph 7(xi) of Schedule 3 to the 1990 Regulations
                                       is required because under the Bankruptcy (Scotland)
                                       Act 1985 the Accountant in Bankruptcy is the person
                                       who discharges the interim and permanent trustee by
                                       way of certificate in bankruptcy (ie personal
                                       insolvency) matters.
Sch 3 para 14      PWC                Is this intended to give legal force to SIP9?
Sch 3 para 14      ACCA               Requirement to maintain records even if fee has not
                                       been agreed on a time/rate basis
                                      Additional burden on IPs
                                      As a part of the case record – significant difficulties.
                                      Have the time records been included in the case record
                                       as a means of ensuring time records are kept for ten
                                       years. If so, a different approach needs to be found.
IR 1994 proposed   PWC                Believes that SSIP 9 provides sufficient transparency
amendment                              for fees.
                                      Should „audience‟ be limited to those with a
                                       financial/economic interest?
                                      Paragraph numbering needs to be amended
IR 1994 proposed   KPMG               Not necessary. SSIPs work.
amendment                             Going too far to expand provision of information to
                                       directors or contribs.
IR 1994 proposed   ACCA               “28 days of making request to IP” should be “28 days
amendment                              of IP receiving request”.
IR 1994 proposed   R3                 Could be used by disgruntled creditors to get
amendment                              information.
                                      If it is to be retained there needs to be provision for
                                       proportionality and reasonableness.
Reg 36A(3)         ACCA               Ref to para (3) in first line should be to (2)
                                      Last line, “that” should be replaced by “the”.
Time records       CP Associates      Not relevant for inclusion in case record or to creditors
                   Limited             where fees are not being approved on a time cost
Time records       Freeman Jones      Only deals with IVAs, which are undertaken at a fixed
                                       fee. Maintaining time records would be solely for the
                                       purpose of complying wit the regulations.
                                      Could an „opt-out‟ be implemented?
Time Records         IPA              Is it time to re-visit SIP9?
Regulation 9(1)(a)   ACCA             References to “person” or “persons” “Person” suggests
and (b); Regulation                    individuals alone and not corporate entities. Elsewhere
11; Sch 2 Part 3                       “ the insolvent” is used.
paras 8 and
10(3)(a); Sch 3 para

Draft Regulation   Respondent      Comment(s)

Partnerships       R3                 Regulations should confirm that in partnership cases
                                       only needs to be one bond for partnership assets
Partnerships       OSAG               Reg 8(6) of the 1990 regs referred to partnerships
                                       which this draft does not? Partnerships in Scotland
                                       have distinct legal personality separate from that of the
                                       partners comprising the partnership. Do partnerships
                                       need to be specified?
No comments        Accountant in