Too Late for Self-Regulation ?

In 2004, Professor David Graham Q.C. from the Centre for Insolvency Law and Policy at Kingston University published notes on the centre's web site. The notes were posted before a meeting in August 2004 with the Insolvency Practices Council (IPC) but they are still worth reading because they demonstrate how little progress has been made since they were written.

Professor Graham's criticisms were remarkably prescient because they were written during the year when the numbers of IVAs began to soar after the corporate IVA providers entered the 'debt market' and the following commentary on the failure of the complaints system applies today. He said:

"Cork as a whole appreciated the need for a satisfactory complaints system. Sadly the climate was not then right to address the issue head on and it has, I suspect, been sidetracked ever since for whatever reasons. The absence of such procedures I regard as a serious blot on English insolvency law. What then can now be done to improve matters, with or without parliamentary intervention?

In theory at any rate the situation could be tolerated in the past by the fact that in a deserving case a legal aid certificate might be granted limited initially to obtaining specialist advice, followed if appropriate by a full certificate covering the cost of litigation. This approach is, I am pretty sure, no longer available so that the case for some non-court based mechanism becomes much stronger, if not imperative. Continued failure to tackle the problem can only bring the community of those holding themselves out as insolvency specialists, consultants and advisers into serious disrepute."

Professor Graham was arguing for the insolvency profession - "with its confusing array of regulatory and other similar bodies" - to tighten up its own regulatory and complaints procedures before change was forced upon them.

Almost three years later and the regulation of personal insolvency is an even greater mess and the IPC are still talking to the Joint Insolvency Committee about revising the ethical guidelines for insolvency practitioners.

This may be a worthy exercise and interested parties can provide their own input by contacting the IPC but surely this is only more tinkering at the edges ?

Example: Behind every IVA that is mis-sold there is a licensed insolvency practitioner - only an IP can act as nominee and supervisor in IVAs - and if practitioners are exercising their expert professional judgement to recommend acceptance of IVAs that have been mis-sold they must already be in breach of existing ethical guideines, let alone s.256 of the Insolvency Act.

More guidelines, more regulations, more laws are of little value if the existing ones are ignored or abused. Debtors and creditors in larger corporate insolvencies can probably look after themselves but personal debtors need protection and a 'one stop' agency with the power to resolve their complaints.

Professor Graham identified this problem three years ago. Pity he was ignored.