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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) The appeal grounds are—

(a) 5that 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
section 391G(1) was given;

(c) 10that 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) that it was unreasonable of the Secretary of State to require the
15penalty 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
391G(4) in respect of the penalty is given to the body.

(4) 20On 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) in the case of the appeal ground in subsection (2)(e), substitute
25for 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) Where the court substitutes a later time for the time specified in the
30notice 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
interest on the penalty from the time specified in the notice under
35section 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) If the whole or part of a penalty is not paid by the time by which it is
40required 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) If an appeal is made under section 391H in relation to a penalty, the
45penalty is not required to be paid until the appeal has been determined
or withdrawn.

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(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) no appeal relating to the penalty has been made under section
391H during the period within which an appeal may be made
5under that section, or

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withdrawn.

(4) The Secretary of State may recover from the recognised professional
body in question, as a debt due to the Secretary of State, any of the
10penalty 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
15had, 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
20omissions).

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) 25stating 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
30representations 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) 35On 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) 40specifying 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) 45must not be less than 28 days.

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

(2) In section 415A of the Insolvency Act 1986 (fees orders: general), after
subsection (1A) (inserted by section 17 of the Deregulation Act 2015) insert—

(1B) 5In setting under subsection (1) the amount of a fee in connection with
maintenance of recognition, the matters to which the Secretary of State
may have regard include, in particular, the costs of the Secretary of
State in connection with any functions under sections 391D, 391E, 391J,
391K and 391N.

140 10Recognised professional bodies: revocation of recognition

(1) After section 391K of the Insolvency Act 1986 (inserted by section 139) 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
professional body may be revoked by the Secretary of State by order if
15the 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
achievement of one or more of the regulatory objectives, and

(b) 20it 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
the Secretary of State by an order which also declares the body
25concerned 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) as mentioned in subsection (1)(a), and

(b) 30that 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) In this Part—

(a) 35an 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) A revocation order or partial revocation order—

(a) 40has 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
period after the order takes effect.

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(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
5to 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
10make 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
15Secretary 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) 20On 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
25subsection (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
30under 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) 35the 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) 40An 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
45390A(1)) if—

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(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
5recognised 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) 10when 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
15continue to be treated as fully or partially authorised (as the
case 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) 20In section 415A of the Insolvency Act 1986 (fees orders: general), after
subsection (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.

141 25Court sanction of insolvency practitioners in public interest cases

After section 391N of the Insolvency Act 1986 (inserted by section 140) 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
30which—

(a) declares 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
35as such either in relation to companies or individuals, as
specified 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
40with;

(d) requires 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
45specified in the order to one or more creditors of a company,

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individual 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
5order.

(3) A 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) 10A 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) In this section and section 391P—

  • 15“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
    recognised professional body by virtue of which the person is
    20authorised 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
that it would be in the public interest for the order to be made.

(2) 25The 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
and at least one of conditions 2, 3, 4 and 5 are met in relation to the
30person.

(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) the relevant recognised professional body has taken action
35against 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) Condition 1 is that the person, in acting as an insolvency practitioner or
40in 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) any standards, or code of ethics, for the insolvency-practitioner
45profession adopted from time to time by the relevant
recognised professional body.

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(2) Condition 2 is that the person—

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

(b) is a fit and proper person to act as an insolvency practitioner
5only 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
only in relation to individuals, but the person’s authorisation is
not so limited.

(3) 10Condition 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
person acting as an insolvency practitioner.

(5) 15Condition 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) In this section “relevant recognised professional body” has the same
20meaning 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
the relevant recognised professional body (instead of applying, or
25continuing 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) it is in the public interest for the direction to be given.

(2) 30But 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) the person is no longer authorised (whether fully or partially) to
35act 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
direction;

(c) 40the 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
be specified in the direction while acting as an insolvency
45practitioner;

(e) the person makes such contribution as may be specified in the
direction to one or more creditors of a company, individual or

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insolvent partnership in relation to which the person is acting or
has 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
5the Department of Enterprise, Trade and Investment in Northern
Ireland (see section 390A(2)(b)).

(5) A 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
10insolvency practitioner in the case.

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

142 Power for Secretary of State to obtain information

After section 391R of the Insolvency Act 1986 (inserted by section 141) insert—

General

391S 15 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) 20Those 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) 25A 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) 30the 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) 35In 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.

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143 Compliance orders

After section 391S of the Insolvency Act 1986 (inserted by section 142) insert—

391T Compliance orders

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

(a) 5a recognised professional body has failed to comply with a
requirement 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) 10If, on an application under this section, the court decides that the body
or 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
15Court of Session.

Power to establish single regulator of insolvency practitioners

144 Power to establish single regulator of insolvency practitioners

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

(a) 20authorising persons to act as insolvency practitioners, and

(b) regulating 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)
25already in existence when the regulations are made (an “existing
body”).

(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
30proper person to act as an insolvency practitioner;

(b) establishing 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
35or partial authorisation to persons who meet those criteria and
requirements;

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

(e) imposing professional and ethical standards for persons so authorised
40and enforcing compliance with those standards;

(f) monitoring 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.

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

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

(b) which the body considers most appropriate for the purpose of meeting
5those 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
impose a financial penalty on a person who is or has been authorised to act as
an insolvency practitioner.

(6) 10The 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
Insolvency Act 1986 immediately before the regulations come into force as
authorised to act as an insolvency practitioner by the body designated by the
15regulations after that time.

(7) Expressions used in this section which are defined for the purposes of Part 13
of the Insolvency Act 1986 have the same meaning in this section as in that Part.

(8) Section 145 makes further provision about regulations under this section which
designate an existing body.

(9) 20Schedule 11 makes supplementary provision in relation to the designation of a
body by regulations under this section.

145 Regulations under section 144: designation of existing body

(1) The Secretary of State may make regulations under section 144 designating an
existing body only if it appears to the Secretary of State that—

(a) 25the body is able and willing to exercise the functions that would be
conferred by the regulations, and

(b) the body has arrangements in place relating to the exercise of those
functions which are such as to be likely to ensure that the conditions in
subsection (2) are met.

(2) 30The conditions are—

(a) that the functions in question will be exercised effectively, and

(b) where the regulations are to contain any requirements or other
provisions prescribed under subsection (3), that those functions will be
exercised in accordance with any such requirements or provisions.

(3) 35Regulations which designate an existing body may contain such requirements
or other provisions relating to the exercise of the functions by the designated
body as appear to the Secretary of State to be appropriate.

146 Regulations under section 144: timing and supplementary

(1) Section 144 and, accordingly, section 145 and subsections (3) and (4) below
40expire at the end of the relevant period unless the power conferred by
subsection (1) of section 144 is exercised before the end of that period.

(2) The “relevant period” is the period of 7 years beginning with the day on which
section 144 comes into force.

(3) Regulations under section 144 are subject to affirmative resolution procedure.