The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill is currently in the House of Lords. It is clearly a Bill in two parts. The first part deals with business rate valuations in the light of Covid-19 and the second provides for the investigation and disqualification of the former directors of dissolved companies. As this second part deals with insolvency I hope it might offer an opportunity to restore confidence in the insolvency system in this country.
I will be tabling amendments to the Bill, which will be considered in Committee, about whether we should have a single independent regulator and ombudsman for the insolvency sector. A single regulator and ombudsman could consider both individual and corporate insolvencies and be funded through a levy. These ideas are hardly radical; they were certainly seen in other parts of our economy decades ago. This Bill offers an opportunity to look at the insolvency arena through these new governance glasses.
What is the situation now? The APPG on fair business banking has done some excellent work on this and have described it as a “Wild West”. There is a code of ethics which is voluntary. One can join a recognised professional body, of which there are currently four—there have been more—which do not necessarily act in concert or with consistency and which also act as trade associations for this part of economy, with practitioners able to shop between these RPBs if the mood suits, for reasons which we can all appreciate.
This sector of the economy is too important to be left to be governed as it currently is. It is also extraordinarily unique as an outlier when one considers it in comparison with, for example, legal or financial services. We have the opportunity to end this inconsistency, to bring clarity and to stop the perception of conflict and, in some situations, the actuality of conflict.
It would be better for insolvency practitioners and for everybody—better for businesses and better for the entire economy—bringing confidence to all involved, and confidence in this part of the economy. Any economy relies not just on brilliant businesses being built and succeeding but on how we deal with businesses when they get into difficulties. It is so important that this is run efficiently and effectively. If we see that a company is distressed and goes into insolvency procedures, how effectively could it be operated? Potentially, it could maintain employment, supply chains and the local community, if run optimally.
This is too important to be left as it currently is, and it was foreseen six years ago in the Small Business, Enterprise and Employment Act, in which powers—yet to be implemented—were given to the Secretary of State to have a single regulator for this service. We have the opportunity to end inconsistency and bring coherence and confidence to this sector and the wider economy and I look forward to debating the issue during Committee Stage.
Resolving Insolvency: Restoring confidence in the system, Report by the APPG Fair Business Banking
Insolvency ‘resembles Wild West‘, The Times, 14 September 2021