Complaints Handling by the Regulators of Insolvency Practitioners: A Comparative Study

Abstract

This paper is a follow up study commissioned by the UK Insolvency Practices Council which builds on our earlier study of complaints handling and disciplinary systems in the UK insolvency practitioner profession: see http://ssrn.com/abstract=1094757. For this study we compared the complaints handling and disciplinary systems of the UK insolvency practitioner profession with five other comparable systems: those of three professional regulatory bodies (the Bar Standards Board, the Royal Institution of Chartered Surveyors, the General Medical Council); the Primary Care Trusts of the National Health Service; and the Financial Ombudsman Service. The paper describes and analyses the disciplinary and complaints systems of the comparator organisations setting them within their relevant context, and using the following broad themes: jurisdiction; purpose; context; accessibility; process; remedies; sanctions; accountability; independence. The recommendations of various published reviews of complaint handling systems are distilled in order to identify best practice benchmarks. In the light of those recommendations and by reference to the themes outlined above, detailed accounts of the systems operated by the comparators are provided. The paper then compares thematically the comparator systems with the complaints and disciplinary procedures of the insolvency practitioner profession. Three broad themes emerge from our study: (i) the trend towards separation of representative and regulatory functions within the governance of professional bodies; (ii) the tendency within the comparator organisations for separation of disciplinary and complaint handling processes and increasing emphasis on alternative dispute resolution mechanisms and financial redress for professional service complaints; (iii) a related tendency within the comparator organisations towards some form of independent, external oversight in relation to complaints. We reach the following conclusions: (i) within the insolvency profession there is a separation between representative and regulatory functions; (ii) unlike the comparators, many of the insolvency regulators focus principally on the regulation and disciplining of insolvency practitioners rather than on complaints resolution and redress for individual complainants; (iii) there is no independent, external avenue of review and redress for complainants of the type and scope observed in the comparators, except in relation to those IPs involved in volume provision of individual voluntary arrangements for consumer debtors; (iv) there appears to be a clear case for extending the jurisdiction of the Financial Ombudsman Service to all insolvency practitioners involved in the provision of debt advice or debt resolution services to personal debtors; and (v) in the prevailing economic climate, the profession and its regulators may wish to consider whether the wider case for an insolvency ombudsman should be the subject of a full, independent review.