Small Business, Enterprise and Employment Bill (HC Bill 117)

(d) specifying a period within which the body may make written
representations with respect to the proposal.

(2) The period specified under subsection (1)(d)—

(a) must begin with the date on which the notice is given to the
5body, and

(b) must not be less than 28 days.

(3) On the expiry of that period, the Secretary of State must decide—

(a) whether to impose a penalty, and

(b) whether the penalty should be the amount stated in the notice
10or a reduced amount.

(4) The Secretary of State must give notice of the decision to the body.

(5) Where the Secretary of State decides to impose a penalty, the notice
under subsection (4) must—

(a) state that the Secretary of State has imposed a penalty on the
15body and its amount,

(b) specify the requirement in question and state—

(i) why it appears to the Secretary of State that the
requirement has not been complied with, or

(ii) where, by that time, the requirement has been complied
20with, why it appeared to the Secretary of State when
giving the notice under subsection (1) that the
requirement had not been complied with, and

(c) specify a time by which the penalty is required to be paid.

(6) The time specified under subsection (5)(c) must be at least three months
25after the date on which the notice under subsection (4) is given to the
body.

(7) Where the Secretary of State decides to impose a penalty, the Secretary
of State must publish the notice under subsection (4).

(8) The Secretary of State may rescind or reduce a penalty imposed on a
30recognised professional body; and, where doing so, the Secretary of
State—

(a) must give the body notice that the penalty has been rescinded
or reduced to the amount stated in the notice, and

(b) must publish the notice; and it must (if possible) be published
35in the same manner as that in which the notice under subsection
(4) was published.

391H Appeal against financial penalty

(1) A recognised professional body on which a penalty is imposed may
appeal to the court on one or more of the appeal grounds.

(2) 40The appeal grounds are—

(a) that the imposition of the penalty was not within the Secretary
of State’s power under section 391F;

(b) that the requirement in respect of which the penalty was
imposed had been complied with before the notice under
45section 391G(1) was given;

(c) that the requirements of section 391G have not been complied
with in relation to the imposition of the penalty and the interests
of the body have been substantially prejudiced as a result;

(d) that the amount of the penalty is unreasonable;

(e) 5that it was unreasonable of the Secretary of State to require the
penalty imposed to be paid by the time specified in the notice
under section 391G(5)(c).

(3) An appeal under this section must be made within the period of three
months beginning with the day on which the notice under section
10391G(4) in respect of the penalty is given to the body.

(4) On an appeal under this section the court may—

(a) quash the penalty,

(b) substitute a penalty of such lesser amount as the court considers
appropriate, or

(c) 15in the case of the appeal ground in subsection (2)(e), substitute
for the time imposed by the Secretary of State a different time.

(5) Where the court substitutes a penalty of a lesser amount, it may require
the payment of interest on the substituted penalty from such time, and
at such rate, as it considers just and equitable.

(6) 20Where the court substitutes a later time for the time specified in the
notice under section 391G(5)(c), it may require the payment of interest
on the penalty from the substituted time at such rate as it considers just
and equitable.

(7) Where the court dismisses the appeal, it may require the payment of
25interest on the penalty from the time specified in the notice under
section 391G(5)(c) at such rate as it considers just and equitable.

(8) In this section, “the court” means the High Court or, in Scotland, the
Court of Session.

391I Recovery of financial penalties

(1) 30If the whole or part of a penalty is not paid by the time by which it is
required to be paid, the unpaid balance from time to time carries
interest at the rate for the time being specified in section 17 of the
Judgments Act 1838 (but this is subject to any requirement imposed by
the court under section 391H(5), (6) or (7)).

(2) 35If an appeal is made under section 391H in relation to a penalty, the
penalty is not required to be paid until the appeal has been determined
or withdrawn.

(3) Subsection (4) applies where the whole or part of a penalty has not been
paid by the time it is required to be paid and—

(a) 40no appeal relating to the penalty has been made under section
391H during the period within which an appeal may be made
under that section, or

(b) an appeal has been made under that section and determined or
withdrawn.

(4) 45The Secretary of State may recover from the recognised professional
body in question, as a debt due to the Secretary of State, any of the
penalty and any interest which has not been paid.

391J Reprimand

(1) This section applies if the Secretary of State is satisfied that an act or
omission of a recognised professional body (or a series of such acts or
omissions) in discharging one or more of its regulatory functions has
5had, or is likely to have, an adverse impact on the achievement of one
or more of the regulatory objectives.

(2) The Secretary of State may, if in all the circumstances of the case
satisfied that it is appropriate to do so, publish a statement
reprimanding the body for the act or omission (or series of acts or
10omissions).

391K Reprimand: procedure

(1) If the Secretary of State proposes to publish a statement under section
391J in respect of a recognised professional body, it must give the body
a notice—

(a) 15stating that the Secretary of State proposes to publish such a
statement and setting out the terms of the proposed statement,

(b) specifying the acts or omissions to which the proposed
statement relates, and

(c) specifying a period within which the body may make written
20representations with respect to the proposal.

(2) The period specified under subsection (1)(c)—

(a) must begin with the date on which the notice is given to the
body, and

(b) must not be less than 28 days.

(3) 25On the expiry of that period, the Secretary of State must decide whether
to publish the statement.

(4) The Secretary of State may vary the proposed statement; but before
doing so, the Secretary of State must give the body notice—

(a) setting out the proposed variation and the reasons for it, and

(b) 30specifying a period within which the body may make written
representations with respect to the proposed variation.

(5) The period specified under subsection (4)(b)—

(a) must begin with the date on which the notice is given to the
body, and

(b) 35must not be less than 28 days.

(6) On the expiry of that period, the Secretary of State must decide whether
to publish the statement as varied.”

134 Recognised professional bodies: revocation of recognition

(1) After section 391K of the Insolvency Act 1986 (inserted by section 133) insert—

“Revocation etc of recognition

391L Revocation of recognition at instigation of Secretary of State

(1) An order under section 391(1) or (2) in relation to a recognised
5professional body may be revoked by the Secretary of State by order if
the Secretary of State is satisfied that—

(a) an act or omission of the body (or a series of such acts or
omissions) in discharging one or more of its regulatory
functions has had, or is likely to have, an adverse impact on the
10achievement of one or more of the regulatory objectives, and

(b) it is appropriate in all the circumstances of the case to revoke the
body’s recognition under section 391.

(2) If the condition set out in subsection (3) is met, an order under section
391(1) in relation to a recognised professional body may be revoked by
15the Secretary of State by an order which also declares the body
concerned to be a recognised professional body which is capable of
providing its insolvency specialist members with partial authorisation
only of the kind specified in the order (see section 390A(1)).

(3) The condition is that the Secretary of State is satisfied—

(a) 20as mentioned in subsection (1)(a), and

(b) that it is appropriate in all the circumstances of the case for the
body to be declared to be a recognised professional body which
is capable of providing its insolvency specialist members with
partial authorisation only of the kind specified in the order.

(4) 25In this Part—

(a) an order under subsection (1) is referred to as a “revocation
order”;

(b) an order under subsection (2) is referred to as a “partial
revocation order”.

(5) 30A revocation order or partial revocation order—

(a) has effect from such date as is specified in the order, and

(b) may make provision for members of the body in question to
continue to be treated as fully or partially authorised (as the
case may be) to act as insolvency practitioners for a specified
35period after the order takes effect.

(6) A partial revocation order has effect as if it were an order made under
section 391(2).

391M Orders under section 391L: procedure

(1) Before making a revocation order or partial revocation order in relation
40to a recognised professional body, the Secretary of State must give
notice to the body—

(a) stating that the Secretary of State proposes to make the order
and the terms of the proposed order,

(b) specifying the Secretary of State’s reasons for proposing to
45make the order, and

(c) specifying a period within which the body, members of the
body or other persons likely to be affected by the proposal may
make written representations with respect to it.

(2) Where the Secretary of State gives a notice under subsection (1), the
5Secretary of State must publish the notice on the same day.

(3) The period specified under subsection (1)(c)—

(a) must begin with the date on which the notice is given to the
body, and

(b) must not be less than 28 days.

(4) 10On the expiry of that period, the Secretary of State must decide whether
to make the revocation order or (as the case may be) partial revocation
order in relation to the body.

(5) The Secretary of State must give notice of the decision to the body.

(6) Where the Secretary of State decides to make the order, the notice under
15subsection (5) must specify—

(a) when the order is to take effect, and

(b) the Secretary of State’s reasons for making the order.

(7) A notice under subsection (5) must be published; and it must (if
possible) be published in the same manner as that in which the notice
20under subsection (1) was published.

391N Revocation of recognition at request of body

(1) An order under section 391(1) or (2) in relation to a recognised
professional body may be revoked by the Secretary of State by order
if—

(a) 25the body has requested that an order be made under this
subsection, and

(b) the Secretary of State is satisfied that it is appropriate in all the
circumstances of the case to revoke the body’s recognition
under section 391.

(2) 30An order under section 391(1) in relation to a recognised professional
body may be revoked by the Secretary of State by an order which also
declares the body concerned to be a recognised professional body
which is capable of providing its insolvency specialist members with
partial authorisation only of the kind specified in the order (see section
35390A(1)) if—

(a) the body has requested that an order be made under this
subsection, and

(b) the Secretary of State is satisfied that it is appropriate in all the
circumstances of the case for the body to be declared to be a
40recognised professional body which is capable of providing its
insolvency specialist members with partial authorisation only
of the kind specified in the order.

(3) Where the Secretary of State decides to make an order under this
section the Secretary of State must publish a notice specifying—

(a) 45when the order is to take effect, and

(b) the Secretary of State’s reasons for making the order.

(4) An order under this section—

(a) has effect from such date as is specified in the order, and

(b) may make provision for members of the body in question to
continue to be treated as fully or partially authorised (as the
5case may be) to act as insolvency practitioners for a specified
period after the order takes effect.

(5) An order under subsection (2) has effect as if it were an order made
under section 391(2).”

(2) In section 415A of the Insolvency Act 1986 (fees orders: general), after
10subsection (4) insert—

“(5) Section 391M applies for the purposes of an order under subsection
(1)(b) as it applies for the purposes of a revocation order made under
section 391L.”

135 Court sanction of insolvency practitioners in public interest cases

15After section 391N of the Insolvency Act 1986 (inserted by section 134) insert—

“Court sanction of insolvency practitioners in public interest cases

391O Direct sanctions orders

(1) For the purposes of this Part a “direct sanctions order” is an order made
by the court against a person who is acting as an insolvency practitioner
which—

(a) 20declares that the person is no longer authorised (whether fully
or partially) to act as an insolvency practitioner;

(b) declares that the person is no longer fully authorised to act as an
insolvency practitioner but remains partially authorised to act
as such either in relation to companies or individuals, as
25specified in the order;

(c) declares that the person’s authorisation to act as an insolvency
practitioner is suspended for the period specified in the order or
until such time as the requirements so specified are complied
with;

(d) 30requires the person to comply with such other requirements as
may be specified in the order while acting as an insolvency
practitioner;

(e) requires the person to make such contribution as may be
specified in the order to one or more creditors of a company,
35individual or insolvent partnership in relation to which the
person is acting or has acted as an insolvency practitioner.

(2) Where the court makes a direct sanctions order, the relevant recognised
professional body must take all necessary steps to give effect to the
order.

(3) 40A direct sanctions order must not be made against a person whose
authorisation to act as an insolvency practitioner was granted by the
Department of Enterprise, Trade and Investment in Northern Ireland
(see section 390A(2)(b)).

(4) A direct sanctions order must not specify a contribution as mentioned
in subsection (1)(e) which is more than the remuneration that the
person has received or will receive in respect of acting as an insolvency
practitioner in the case.

(5) 5In this section and section 391P—

• “the court” means the High Court or, in Scotland, the Court of
  Session;

• “relevant recognised professional body”, in relation to a person
  who is acting as an insolvency practitioner, means the
  10recognised professional body by virtue of which the person is
  authorised so to act.

391P Application for, and power to make, direct sanctions order

(1) The Secretary of State may apply to the court for a direct sanctions
order to be made against a person if it appears to the Secretary of State
15that it would be in the public interest for the order to be made.

(2) The Secretary of State must send a copy of the application to the
relevant recognised professional body.

(3) The court may make a direct sanctions order against a person where, on
an application under this section, the court is satisfied that condition 1
20and at least one of conditions 2, 3, 4 and 5 are met in relation to the
person.

(4) The conditions are set out in section 391Q.

(5) In deciding whether to make a direct sanctions order against a person
the court must have regard to the extent to which—

(a) 25the relevant recognised professional body has taken action
against the person in respect of the failure mentioned in
condition 1, and

(b) that action is sufficient to address the failure.

391Q Direct sanctions order: conditions

(1) 30Condition 1 is that the person, in acting as an insolvency practitioner or
in connection with any appointment as such, has failed to comply
with—

(a) a requirement imposed by the rules of the relevant recognised
professional body;

(b) 35any standards, or code of ethics, for the insolvency-practitioner
profession adopted from time to time by the relevant
recognised professional body.

(2) Condition 2 is that the person—

(a) is not a fit and proper person to act as an insolvency
40practitioner;

(b) is a fit and proper person to act as an insolvency practitioner
only in relation to companies, but the person’s authorisation is
not so limited; or

(c) is a fit and proper person to act as an insolvency practitioner
45only in relation to individuals, but the person’s authorisation is
not so limited.

(3) Condition 3 is that it is appropriate for the person’s authorisation to act
as an insolvency practitioner to be suspended for a period or until one
or more requirements are complied with.

(4) Condition 4 is that it is appropriate to impose other restrictions on the
5person acting as an insolvency practitioner.

(5) Condition 5 is that loss has been suffered as a result of the failure
mentioned in condition 1 by one or more creditors of a company,
individual or insolvent partnership in relation to which the person is
acting or has acted as an insolvency practitioner.

(6) 10In this section “relevant recognised professional body” has the same
meaning as in section 391O.

391R Direct sanctions direction instead of order

(1) The Secretary of State may give a direction (a “direct sanctions
direction”) in relation to a person acting as an insolvency practitioner to
15the relevant recognised professional body (instead of applying, or
continuing with an application, for a direct sanctions order against the
person) if the Secretary of State is satisfied that—

(a) condition 1 and at least one of conditions 2, 3, 4 and 5 are met in
relation to the person (see section 391Q), and

(b) 20it is in the public interest for the direction to be given.

(2) But the Secretary of State may not give a direct sanctions direction in
relation to a person without that person’s consent.

(3) A direct sanctions direction may require the relevant recognised
professional body to take all necessary steps to secure that—

(a) 25the person is no longer authorised (whether fully or partially) to
act as an insolvency practitioner;

(b) the person is no longer fully authorised to act as an insolvency
practitioner but remains partially authorised to act as such
either in relation to companies or individuals, as specified in the
30direction;

(c) the person’s authorisation to act as an insolvency practitioner is
suspended for the period specified in the direction or until such
time as the requirements so specified are complied with;

(d) the person must comply with such other requirements as may
35be specified in the direction while acting as an insolvency
practitioner;

(e) the person makes such contribution as may be specified in the
direction to one or more creditors of a company, individual or
insolvent partnership in relation to which the person is acting or
40has acted as an insolvency practitioner.

(4) A direct sanctions direction must not be given in relation to a person
whose authorisation to act as an insolvency practitioner was granted by
the Department of Enterprise, Trade and Investment in Northern
Ireland (see section 390A(2)(b)).

(5) 45A direct sanctions direction must not specify a contribution as
mentioned in subsection (3)(e) which is more than the remuneration
that the person has received or will receive in respect of acting as an
insolvency practitioner in the case.

(6) In this section “relevant recognised professional body” has the same
meaning as in section 391O.”

136 Power for Secretary of State to obtain information

After section 391R of the Insolvency Act 1986 (inserted by section 135) insert—

“General

391S 5 Power for Secretary of State to obtain information

(1) A person mentioned in subsection (2) must give the Secretary of State
such information as the Secretary of State may by notice in writing
require for the exercise of the Secretary of State’s functions under this
Part.

(2) 10Those persons are—

(a) a recognised professional body;

(b) any individual who is or has been authorised under section
390A to act as an insolvency practitioner;

(c) any person who is connected to such an individual.

(3) 15A person is connected to an individual who is or has been authorised
to act as an insolvency practitioner if, at any time during the
authorisation—

(a) the person was an employee of the individual;

(b) the person acted on behalf of the individual in any other way;

(c) 20the person employed the individual;

(d) the person was a fellow employee of the individual’s employer;

(e) in a case where the individual was employed by a firm,
partnership or company, the person was a member of the firm
or partnership or (as the case may be) a director of the company.

(4) 25In imposing a requirement under subsection (1) the Secretary of State
may specify—

(a) the time period within which the information in question is to
be given, and

(b) the manner in which it is to be verified.”

137 30Compliance orders

After section 391S of the Insolvency Act 1986 (inserted by section 136) insert—

“391T Compliance orders

(1) If at any time it appears to the Secretary of State that—

(a) a recognised professional body has failed to comply with a
35requirement imposed on it by or by virtue of this Part, or

(b) any other person has failed to comply with a requirement
imposed on the person by virtue of section 391S,

the Secretary of State may make an application to the court.

(2) If, on an application under this section, the court decides that the body
40or other person has failed to comply with the requirement in question,

it may order the body or person to take such steps as the court considers
will secure that the requirement is complied with.

(3) In this section, “the court” means the High Court or, in Scotland, the
Court of Session.”

5Power to establish single regulator of insolvency practitioners

138 Power to establish single regulator of insolvency practitioners

(1) The Secretary of State may by regulations designate a body for the purposes
of—

(a) authorising persons to act as insolvency practitioners, and

(b) 10regulating persons acting as such.

(2) The designated body may be either—

(a) a body corporate established by the regulations, or

(b) a body (whether a body corporate or an unincorporated association)
already in existence when the regulations are made (an “existing
15body”).

(3) The regulations may, in particular, confer the following functions on the
designated body—

(a) establishing criteria for determining whether a person is a fit and
proper person to act as an insolvency practitioner;

(b) 20establishing the requirements as to education, practical training and
experience which a person must meet in order to act as an insolvency
practitioner;

(c) establishing and maintaining a system for providing full authorisation
or partial authorisation to persons who meet those criteria and
25requirements;

(d) imposing technical standards for persons so authorised and enforcing
compliance with those standards;

(e) imposing professional and ethical standards for persons so authorised
and enforcing compliance with those standards;

(f) 30monitoring the performance and conduct of persons so authorised;

(g) investigating complaints made against, and other matters concerning
the performance or conduct of, persons so authorised.

(4) The regulations may require the designated body, in discharging regulatory
functions, so far as is reasonably practicable, to act in a way—

(a) 35which is compatible with the regulatory objectives, and

(b) which the body considers most appropriate for the purpose of meeting
those objectives.

(5) Provision made under subsection (3)(d) or (3)(e) for the enforcement of the
standards concerned may include provision enabling the designated body to
40impose a financial penalty on a person who is or has been authorised to act as
an insolvency practitioner.

(6) The regulations may, in particular, include provision for the purpose of
treating a person authorised to act as an insolvency practitioner by virtue of
being a member of a professional body recognised under section 391 of the
45Insolvency Act 1986 immediately before the regulations come into force as