The All Party Parliamentary Group on Fair Business Banking has praised the Government for announcing plans to introduce a single regulator to improve consistency and confidence in the insolvency profession.
In a statement, the APPG said: "Over the course of 2021, the APPG on Fair Business Banking conducted an in-depth investigation after frequent reports of issues from businesses since our formation.
"Our inquiry found that while many insolvency practitioners act professionally and ethically, others have been reported to be protecting the interests of the party with the power to appoint them over those of the business facing insolvency."
This is especially concerning given the industry is self-regulated by a small number of recognised professional bodies, the APPG said.
Evidence shows that self-regulation fails to sanction many misconducts, is slow and has a lack of transparency, according to the APPG.
The statement added: "The publication of our report in September ‘Resolving Insolvency: Restoring confidence in the system’ brought these concerns to the attention of policymakers and are delighted that the department of Business, Energy and Industrial Strategy has launched a consultation on the creation of a single regulator.
"The power to create a single regulator were brought about in the 2015 Small Business, Enterprise and Employment Act."
The Government is also consulting on a redress mechanism, such as an ombudsman, which would bring further fairness and transparency to the sector.
Kevin Hollinrake, Conservative MP for Thirsk and Malton, who is Co-Chair of the APPG on Fair Business Banking, commented “This is a fantastic win for the APPG on Fair Business Banking after campaigning and investigating the insolvency profession over the course of 2021.
"The Government is moving in the right direction, and if insolvency practitioners are doing their jobs fairly they have absolutely nothing to fear from the introduction of a neutral and independent regulator. The Government should also go further and introduce an ombudsman to offer businesses a place to go if things go wrong. ”
“The APPG wholeheartedly welcomes the government’s full-scale overhaul of the regulation of insolvency practitioners.
"For too long the industry has been overseen by membership organisations, which is a conflict in itself, that doesn’t have the teeth to tackle the conflicts of interest we regularly encounter. Without a robust regulator and no mechanism for redress or dispute resolution, insolvency practitioners have effectively been their own judge, jury and executioner.
"We are delighted that these proposals are under consultation, and look forward to working with the government and the insolvency service in the coming months to make sure that the new system is fit for purpose and doesn’t get watered down by the inevitable lobbying from those with vested interests.”