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Concerns
from industry stakeholders over the business and sales strategies of several of
the large volume providers prompted a review of how the insolvency
practitioners who oversee IVAs are regulated. Concerns include:
- advice
being given to debtors, potentially leading them to enter an IVA when other
debt solutions may be more appropriate
- charging of expenses whose value and propriety is questionable
- financial
products of dubious value being potentially miss-sold to individuals who enter an IVA
The
review found that while the Recognised
Professional Bodies (RPBs) who licence insolvency practitioners have been effective
in identifying these concerns, in some cases their post-visit process lacks
robustness and is failing to address these concerns in a prompt and efficient
way. Following the review the Insolvency Service is now working with the RPBs
to implement a number of changes to how these large providers are regulated.
 Insolvency
Live!, our annual forum for debt advisers and insolvency professionals returns
in July. If you have any issues you would like to see discussed we’d love to hear from you.
Tickets for the event will be available in June.
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The FCA and the
Insolvency Service have strengthened ties after signing a Memorandum
of Understanding (MoU) committing both organisations
to increase collaboration around enforcement activities. Following the 2016 Corporate
Governance reform green paper both organisations reviewed
their regulatory powers to take enforcement action against directors and
companies operating contrary to the public interest. The MoU establishes a
framework of co-operation between the two enforcement bodies enabling
information relating to misconduct, investigations and enforcement to be shared
so that both organisations can better use their powers to tackle corporate and
financial misconduct and the commission of financial crime.
Plans to produce new guidance to help employers and insolvency
practitioners manage staff engagement and redundancies during insolvency have been
outlined. Responses to an earlier call for evidence showed that the legislation
around collective redundancy consultation can be difficult to apply in a
real-life insolvency situations where decisions need to be made quickly, there
is little money available, options are limited and attention is focused on
attempts to rescue the business.
Additionally, this may be the first time employers have ever dealt with
a collective redundancy situation, which can be daunting while navigating both
insolvency and employment law, all while the business is in financial distress.
The new guidance will set out minimum expectations for insolvency
practitioners to:
- notify the government in
advanced of collective redundancy proposals
- comply with the requirement to
consult when seeking to rescue or wind up a business
- provide information on how to
ensure legal compliance when electing employee representatives
 Recent
enforcement cases demonstrate our work to tackle financial wrongdoing and
deliver economic confidence:
- a
£650,000 confiscation order was obtained against Derbyshire man, Alan Yeomans, who is currently serving 6 and a half year prison sentence for
several offences including money laundering, bankruptcy offences and producing cannabis.
His criminal activities netted him £1 million which he spent on Rolex watches,
valuable works of art and antiques (pictured), as well as building a bespoke property
concealed in a barn that was dubbed ‘Shedley Manor
- former
solicitor Philip Shiner had his bankruptcy
restrictions extended to six years after he gifted away assets to his family to
avoid paying his creditors. Philip Shiner petitioned
for his own bankruptcy in March 2017 declaring that he had no money to pay his
creditors following the closure of his law practice, Public Interest Lawyers
Limited, after he was struck off as a
solicitors in 2017 over misconduct relating to false abuse claims
against British troops
- Afren PLC was a former
FTSE 250 oil and gas company before it went into administration in July 2015
with an estimated deficiency of $1,754,614,564. As part of their investigations
into why the gas company collapsed, the Insolvency Service looked into the
conduct of the directors and found that Osman Shahenshah and Shahid Ullah
failed to declare to their board personal interests in a number of
high-value transactions. The former chief executive and chief operating
officer have since been disqualified from running companies for 14 years each following a court order
-
extended bankruptcy restrictions of 13 years were
imposed by the County Court on Chasjit Verma who was found to have initiated
unauthorised payments totaling £164,507 from her employer’s bank accounts to
her own accounts or accounts she controlled prior to petitioning for her own
bankruptcy
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