Celebrating Living Wage Week 2019

As one of 1,648 Living Wage accredited employers in Scotland, Insolvency Support Services is delighted to be joining the annual celebration of the Living Wage movement in the UK this week.

More about Scottish Living Wage: https://scottishlivingwage.org/

 

Burial jobs – Transparency v. Efficiency?

Alison Curry examines the differing approaches adopted north and south of the border to CVL closure and court involvement.

For over a decade, the buzzword across regulation has been ‘transparency’. The BBC’s complaints handling processes were recently accused of lacking it and the Insolvency Service has just consulted on whether those applying its regulatory objectives are sufficiently meeting it. We are told by the policy makers that the periodic reporting requirements placed on IPs are intended to ensure it.

But in the case of no or low-assets jobs, there is surely a balance to be struck between the ‘mahogany open-casket’ approach of providing chapter and verse to a disengaged creditor cohort and the benefits of an efficient ‘economy burial’; and it seems we may be striking that balance at a different point in Scotland than we are in England and Wales.

Comparable systems

Both in Scotland and in England and Wales, comparable systems for liquidator appointments by deemed consent in CVL now exist; SIP 6 reporting requirements are identical (and identically, largely optional) and annual reporting has replaced annual meetings. The debate around whether these measures promote creditor engagement is now well rehearsed and I shan’t reprise it here!

But where there is a marked difference (and one that I have no doubt my English colleagues will be as surprised at as I was to discover) is in the manner in which a Scottish CVL may be concluded without the need or cost of a final report to creditors.

This is perhaps an unintended consequence of historical national differences in the approach to corporate insolvency administration. As there is no Official Receiver in Scotland, s138 IA1986 requires a liquidator to be appointed by the court upon the making of a winding-up order (a clearly sensible provision to ensure there is always a liquidator in office). The provisions of s203 IA 1986, which allow the Official Receiver to be released from office without the need for a final report (or final meeting, as was), have a parallel provision in s204, which applies to the private practice liquidators of Scottish companies in compulsory winding-up proceedings. They may apply to court for early dissolution ‘if it appears to the liquidator that the realisable assets of the company are insufficient to cover the expenses of the winding up’ – ie without going through the final reporting process. How is this relevant to final reports in CVL cases, I hear you ask?

Well, under s112 IA86, a liquidator, creditor or contributory can apply to court to determine any question arising in the winding up of a company – be that an MVL, CVL or compulsory matter. The court, if satisfied that the required exercise of power will be just and beneficial, may make such order as it thinks just.

Court involvement shivers

Scottish practitioners are quite accustomed to levels of court involvement in their cases that would send a shiver down the spine of their English and Welsh counterparts. The court system is customarily involved in the remuneration approval process and routine applications are made at a level of costs and determined with a timeliness that does not have the same dissuasive impact that the spectre of approaching the English courts holds.

S112 provides the court a very broad discretion and one that forms the basis of routine applications in CVL cases in Scotland, including those for early dissolution under s204. By stark contrast, s112 appears to be little used in England and Wales. Reported cases appear to be few and far between, and typically involve cases of substantial potential value. For example, in Rubin v. Cohen & Crooks [2017] (a dispute between successive liquidators about the availability of funds to meet 1,796 separate statement of affairs fees), there were fees totalling £2.9m at stake. Another reported case concerned the disclosure of documents by an English liquidator to the USA trustee in the Bernard Maddoff case.

What the nature of these cases illustrates is that matters don’t often get as far as the courts in England & Wales unless there are some pretty big numbers involved. Curiously, it’s the polar opposite of the justification for making such an application in Scotland to apply s204 as an alternative to the delivery of a final report to creditors: that of costs and efficiency.

Swift cremation

The practice of applying for early dissolution under s204 in Scottish CVL cases must beg questions about consistency across the UK of the CVL process, if not its transparency. It is quite feasible that creditors will receive no substantive information in this scenario, as most of the SIP 6 information requirements are not mandatory and the s138 reporting requirements in the compulsory process do not apply to CVL cases. Depending on timing, a Scottish CVL matter can proceed to a swift and economic cremation, potentially without any form of report having been issued to creditors. Whether the court demands a report is entirely at the court’s discretion but is not normally required. Maybe, having spotted the ‘gap’, that might change?

Economically speaking, this could be viewed as a good idea. If efficiencies like these lead to reduced costs, surely that is a tick in the box for the regulatory objective of a competitive profession? It remains to be seen what approach the courts will be to such applications, particularly if no SIP 6 report was issued, or what regulatory expectations will evolve. But for now, at least, the balance in Scotland seems to be for efficiency over transparency.

Alison Curry is an insolvency practitioner, trainer and director at Insolvency Support Services Limited.

Insolvency (Scotland) Rules – 6 Months On

Join Eileen Maclean for one of our Insolvency (Scotland) Rules – 6 Months On Technical Update courses to find out more about developments under the new rules. For further information or to book a place, contact courses@insolvencysupportservices.com

First published in the October 2019 edition of RECOVERY News and reproduced with the permission of R3 and GTI Media.

Sample materials for Compliance Awareness Online Learning

You can preview the different types of content included in our new modular Compliance Awareness Online Learning course in our free samples. They will take just a few minutes to view or complete. Click here to access the free samples.

Instructional video content

Concise, comprehensive videos that you can watch, learning when and where is most convenient for you.

Reference materials and handouts

Downloadable documents to read and keep for future use and reference.

Knowledge checks

Multiple-choice knowledge checks to reinforce the value of the learning.

To sample the Ethics and Professional Standards Quick Quiz, register as a user with your name and email address.

Course Modules

Our Compliance Awareness Online Learning course is delivered in four modules, which you can mix and match to cater for your practice’s needs:

1.      Anti-money laundering (AML)

2.      Data privacy (GDPR)

3.      Vulnerability awareness

4.      Ethics and professional standards

Click here or below to watch our one-minute introductory video.

To find out more, click here, call 0845 601 7570 or email courses@insolvencysupportservices.com

 

 

ISS Training launches Compliance Awareness Online Learning

Insolvency Support Services’ training division, ISS Training, has launched an innovative new Compliance Awareness Online Learning course, adding an online learning platform to the firm’s course delivery methods.

The course is delivered in four topical modules: anti-money laundering, data privacy, vulnerability awareness, and ethics and professional standards.

Alison Curry, a director of Insolvency Support Services, commented: “We have developed this course in this format to assist insolvency practices manage compliance risks cost-effectively, meet their training obligations and protect their firm’s reputation.

These days insolvency practitioners and their teams must have a sound knowledge of practice areas beyond the scope of technical insolvency training.

There have been significant legislative changes in the areas of anti-money laundering and data protection, vulnerability awareness is high on the political agenda, and ethics and professional standards issues continue to dominate the complaints mailboxes of the regulators.

If all team members have a good grasp of the essentials of these subjects, they can flag issues with their managers as they arise. Failing to identify an issue in a timely manner presents a risk to the practice that can result in reputational damage to the practice and regulatory sanction for its insolvency practitioners.”

More information about Compliance Awareness Online Learning  including an introductory video and sample content, can be found here.

Managing risk in your practice

Effective compliance awareness

A frequent observation among our clients is how, increasingly, insolvency practice seems to be less about applying the Insolvency Act and rules and more about meeting other obligations; whether it be anti-money laundering (AML), GDPR, vulnerability awareness or the ever-evolving expectations of the regulators.

But ensuring you and your team have a good level of awareness of these peripheral aspects of our day-to-day work shouldn’t be seen as a distraction from the real task at hand – it is central to controlling risk presented to your business. And in some cases, such as AML and data protection, it is a legal requirement. Embedding a culture of compliance awareness, that is routinely acted upon throughout the firm within daily tasks, acts to nip potential issues in the bud. So, what can you do to manage risk in your practice?

Effectively managing risk is essential to success

Risk management is defined as the forecasting and evaluation of financial risks, together with the identification of procedures to avoid or minimise their impact. The requirement to assess various forms of risk has become a recurring theme in many areas of law and regulation. While it can all seem somewhat nebulous, getting it wrong can be costly in terms of time, fines and penalties and reputational damage to you and your firm.

Models for managing risk identify four key strategies: avoid, control, accept and transfer. The risk acceptance strategy (i.e. just accept any penalties if and when they arise) isn’t a viable option for a licensed professional, not least given the gravity of the risks we manage and the severity of the potential punishments that can be meted out by the likes of the Information Commissioner’s Office (ICO) or the Financial Conduct Authority (FCA). Given the personal nature of insolvency licensing, the opportunities for risk transference are limited to those that can be insured against, and avoiding risk entirely isn’t likely to result in the acceptance of many appointments. So practically speaking, we are left with the option of controlling the risk we face, as best we can.

Start with the known unknowns

None of us have a crystal ball. The “unknown unknowns” (unexpected or unforeseeable conditions) will pose a potentially greater risk simply because they cannot be anticipated based on past experience. Challenging circumstances will necessarily occur from time to time. This is where robust internal policies and procedures come in and the assistance of lawyers and specialist advisers will be called upon.

However, on a daily basis there are “known unknowns” that we can better manage by improving our understanding of what is expected of us and what to look out for. In key compliance areas it isn’t just the licensed professional that needs to be alive to the risks, everyone has a part to play in the risk management process, whether that be in detecting a financial crime, keeping personal data private, meeting the needs of a vulnerable client or maintaining expected professional standards requirements. A chain is only as strong as its weakest link.

Knowledge is power

When it comes to managing risk, you can only really do so if you are aware of the form those risks might take and what is expected in terms of response. Experienced practitioners will have an inherent understanding of the risks in an appointment, built upon their years of experience, and their internal alarm bells will ring when they detect something out of the ordinary. That knowledge is applied almost subconsciously and not always articulated to those around them. We need to share the key elements of that knowledge and experience with the entire team in order to maximise its effectiveness on risk management. Training the team need not be costly, unduly time consuming nor disruptive to the business, and can yield significant benefits. And we can help you do that.

It’s not entirely optional

The Data Protection Act 2018 and the Money Laundering Regulations 2017 contain mandatory staff training requirements. The FCA is currently consulting on further guidance around the treatment of customers in vulnerable circumstances which places a strong emphasis on the need to upskill client-facing staff. While FCA regulation has not come to us all just yet, it gives a clear steer on the directions of travel for regulatory expectations when dealing with those in vulnerable circumstances. And that may include directors and employees, not just indebted individuals.

Also sometimes overlooked are the expectations of the Ethics Code; which states up front that “Although an insolvency appointment will be of the insolvency practitioner personally rather than his practice, he should ensure that the standards set out in the Code are applied to all members of the insolvency team.” Realistically, the team can only do that if they are equipped with a basic knowledge of what professional standards are expected of insolvency practitioners and why.

We can help

We can help your team manage these key compliance risks with the New ISS Compliance Awareness Online Learning Course. For further information contact: courses@insolvencysupportservices.com

First published in the August 2019 edition of RECOVERY News and reproduced with the permission of R3 and GTI Media.

R3 in Scotland’s NextGen/Young Professionals Group committee

The R3 in Scotland Committee has invited expressions of interest in joining and becoming part of an exciting initiative to form a sub-committee of ‘NextGen’ and ‘young professionals’ to guide the shape and values of the profession in Scotland into the future.

It will be a requirement for all initial members of the sub-committee to be confirmed R3 members, however expressions of interest may be made by non-members as well as existing R3 members. Any nomination should be received by 23 September 2019 to be considered.

Insolvency Support Services very much welcomes this important inititaive to support and encourage career development and community among the insolvency and restructuring profession in Scotland.

If you are interested in being involved, either as a member of the organising committee or as a group participant, please contact R3.

Eileen Maclean features in the TRI 250

Insolvency Support Services director Eileen Maclean has been included in the prestigious TRI 250, the exclusive group of senior professionals across the turnaround, restructuring and insolvency profession.

As an index of influence and best practice, leading trade journal Credit Strategy’s TRI 250 recognises those responsible for the progression of industry standards, and inspiring excellence across turnaround, restructuring and insolvency.

Eileen Maclean to chair Law Society of Scotland Insolvency and Debt Recovery Conference

Insolvency Support Services director Eileen Maclean is to chair and present at the Law Society of Scotland’s Insolvency and Debt Recovery conference next month.

Taking place at the 200 SVS venue in Glasgow on 5 September, the conference will look at key issues and challenges faced by professionals operating in the increasingly complex world of insolvency and debt recovery, and address recent legal changes and how they can be managed in practice.

Eileen will be speaking about the new Scottish Insolvency Rules, highlighting key changes from the previous regime.

Joining Eileen in the impressive line-up of speakers will be:

  • Sian Aitken, Partner, CMS
  • Christina Barr, Solicitor, Brodies
  • Stephen Cowan, Partner, Yuill + Kyle
  • Dr Richard Dennis, Chief Executive, The Accountant in Bankruptcy
  • Andrew Foyle, Partner, Shoosmiths
  • Steven Jansch, Partner and Head of Insolvency, Gilson Gray
  • Paul Kirkwood, Solicitor and Commercial Mediator
  • Louise Laing, Senior Associate, Brodies
  • Bobby Lindsay, Lecturer, University of Glasgow

For more information about the conference and to book, visit the Law Society of Scotland’s website.

Call for evidence on court reporting and court approval of remuneration

The recent R3 Scotland newsletter highlighted some concerns about the time taken for some court reporters to respond, with a request for evidence if appropriate.

We are aware that not all users of court reporters are based in Scotland, and that not everyone is a member of R3. Therefore, if you are experiencing these delays and would like to pass on your concerns, please contact Penny McCoull at penny@asmrecovery.co.uk

Item from R3 Scotland Newsletter – Summer 2019

Penny McCoull
Following concerns raised by committee members about instances where they had experienced delays in receiving reports back from court-appointed reporters, I raised this matter with both the R3 Smaller Practices Group Committee and the Scottish Technical Committee. I have received confirmation that ICAS is aware of the issue and is willing to contact the IPs concerned directly. If any members wish to provide details of specific cases where undue delay has been experienced in obtaining authorisation for their own fees and approval of a scheme of division, can they please email me in confidence (penny@asmrecovery.co.uk) or contact David Menzies at ICAS (dmenzies@icas.com)

The issues can be summarised as:

  • The court report system normally works very well, as IPs are all too aware that their colleagues are waiting for approval of their fees and authorisation of a scheme of division to carry out our main function, which is to return funds to creditors.
  • The system breaks down where some IPs, whether through pressure of their own workload, absence from work or some other reason, are not attending to the audit of files delivered to them in a timely manner. The regulations state that the audit should be carried out within six weeks of the end of the accounting period, which itself is dependent on the appointed IP preparing their accounts within two weeks of the end of the accounting period.
  • RPBs are now looking at court reports carried out by their members as part of the monitoring visit. R3 members are encouraged to advise us of any specific instances where they have waited a longer time than is reasonable for the reporter to submit their report. As everyone’s idea of timescales is subjective, notifications should be made in confidence to R3 for consideration. Members will be notified in due course of the follow-up action taken.
  • Informal discussions with the Courts are being advanced by R3 STC members. However, in order to assess the extent of the issue, the Committee calls for members to provide evidence of their experiences (anonymised if desired), on delays by appointed reporters and/or courts in the approval process.

100% pass rate for ISS Training’s CPI and CPPI students

It’s a clean sweep for ISS Training’s students in the June 2019 CPI and CPPI exam sitting. Every single one of our candidates has passed their exam, with a third achieving a merit.

CPI

Chris Addison, 180 Advisory

George Elliott, Campbell Dallas

Emma Hardie, Cowan & Partners

Jemma Kirk, Thomson Cooper (with merit)

Kirsti Kornav, FRP Advisory (with merit)

CPPI

Tommy Gallacher, Campbell Dallas

Mark Inglis, MLM (with merit)

Fiona McAnnany, Grant Thornton

Gillian McIlroy, AiB

Our director Eileen Maclean, who delivers our CPI and CPPI training, said: “We’re chuffed to bits for all of our students and feeling enormously proud of them all. It’s hugely rewarding to see everyone’s hard work paying off. Very well done, class of 2019!“

Enrolment for our 2020 CPI and CPPI training will be open soon. If you would like to discuss your options, please speak to us at any time on 0845 601 7570 or email courses@insolvencysupportservices.com