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10.14 pm
The Minister for Competition and Consumer Affairs (Mr. John M. Taylor): I congratulate my hon. Friend the Member for Milton Keynes, North-East (Mr. Butler) on securing a debate on this matter. I listened to his speech with interest. The important sentiment that seizes me is that I greatly sympathise with his constituents, Mr. and Mrs. Preen. They are clearly dissatisfied with the way in which matters proceeded following Mr. Aiyer's appointment as administrator of their company. Furthermore, they are most unhappy with the way in which the Institute of Chartered Accountants subsequently handled their complaint about Mr. Aiyer I shall return to their case, but I should like first to make some general points about the regulation of the insolvency profession.
One of the major recommendations of the review committee on insolvency law and practice, which was chaired by the late Sir Kenneth Cork, was that insolvency practitioners should be members of a recognised professional body approved by the Secretary of State. These proposals were accepted by the Government. Seven bodies, including the principal accountancy bodies and the Law Society, both in England and Wales and in Scotland, have been recognised to authorise insolvency practitioners. The Secretary of State also has a licensing function and currently authorises some 150 practitioners.
In 1992, my Department's insolvency service commenced a programme of routine monitoring visits to practitioners to test compliance with the legislation. Visits were undertaken both to practitioners authorised by the Secretary of State and to those authorised by the recognised bodies. The visits identified a number of practitioners with compliance problems.
Since 1994, the bodies have had in place a formal programme of monitoring visits to practitioners. The purpose of the visits is to assist in determining whether a practitioner is and continues to be fit and proper, and to promote compliance not only with statutory obligations but with best practice. It is clear from the monitoring process that the majority of practitioners are continuing to make improvements, and are now regarded as having acceptable procedures. When failures in compliance are identified, undertakings are sought where appropriate. In more serious cases, the authorising body will consider whether further action is necessary.
My officials in the Insolvency Service are and will continue to be in close contact with the bodies as part of the continuing development of the regulatory process. In particular, there is in place a programme whereby officials visit the bodies to examine their procedures in relation to authorisations and the monitoring and handling of complaints. Appropriate recommendations are made to the body concerned where there appears to be scope for improvement.
Following discussions between my officials, the professional bodies and the Society of Practitioners of Insolvency, agreement was reached earlier this year on the development of best practice guidance for practitioners. This followed concerns which had been raised, particularly in relation to the disclosure of remuneration and appointment procedures. The Society of Practitioners of Insolvency agreed to take the lead
in the preparation of this guidance material, which is then issued by each of the bodies to its own practitioners. That is directed to ensuring that the highest standards are pursued, and that a consistent approach is adopted by all practitioners.
There has therefore been considerable progress in the development of the regulatory process since its introduction by the Insolvency Act 1986. The professional bodies are well aware that the regulation of the insolvency profession is the subject of continued scrutiny. This very morning, my officials met the professional bodies, who agreed in principle to set up a working party to review their experience of professional regulation in the 10 years since its introduction. The details of that review will be announced shortly, but clearly, everyone concerned in and with insolvency will welcome that development. I promise that my Department will play a full role in helping to take those discussions forward.
I refer to the particular case that concerns my hon. Friend and his constituents, Mr. and Mrs. Preen. My hon. Friend will recall meeting my officials earlier in the year to discuss his concerns. It is clear that the manner in which his constituents' complaints were dealt with by the Institute of Chartered Accountants was not all that it should have been. There were delays in the investigation into the complaint, and delays in communicating its progress and its outcome to Mr. and Mrs. Preen.
Mr. and Mrs. Preen were not the only people to complain about Mr. Aiyer. By the time the investigation into their complaint had been completed, the institute had already decided to withdraw his insolvency licence. Mr. Aiyer is no longer an authorised insolvency practitioner or an institute member.
I referred earlier to the monitoring visits that my officials make to the recognised professional bodies. Such a visit was made to the institute in 1995, as a result of which recommendations were made in relation to their procedures and practices. Because there were clearly concerns about the handling of Mr. and Mrs. Preen's complaint, my officials arranged to meet the director of the institute's department of professional conduct, Mr. Matthew Ives, and two of his senior colleagues. The meeting focused on not only Mr. and Mrs. Preen's concerns, but more general concerns over the way in which complaints made to the institute were dealt with, and the institute's response to the recommendations arising out of the monitoring visit.
The institute recognised that Mr. and Mrs. Preen remained dissatisfied with the way in which their complaint was handled, and acknowledges that matters were not dealt with as they might have been. There have, however, been material changes to the institute's procedures for handling complaints since Mr. andMrs. Preen raised their concerns about Mr. Aiyer.
The director of professional conduct was able to point to the introduction of controls to ensure that the issues raised by the complainant are properly identified in every case at an early stage. Further controls ensure that the progress of the investigation into the complaint is closely monitored and managed. Additional resources have been allocated specifically to deal with insolvency-related complaints.
The institute recognises that those improvements come too late for Mr. and Mrs. Preen. The director of professional conduct has written to them to express his regret at their dissatisfaction, and his recognition that there were deficiencies in the handling of their case, for which he has apologised.
My hon. Friend asked me whether some sanction is available to my Department, short of withdrawing the recognition of a professional body, where it had proved itself to be incompetent in the regulation of its insolvency practitioner members. He will be aware that, under the legislation, my Department has no such sanction. Either a professional body is recognised or it is not. I hope that he will accept that most insolvency practitioners operate to a good and ethical standard most of the time and, in so doing, are effectively regulated by the recognised professional bodies. There are always exceptions to that rule, and clearly we are dealing with one such exception tonight.
As I have said before, and it merits saying again, the onus is on the profession and the recognised professional bodies to ensure that exceptional cases are reduced to the absolute minimum, if not eliminated
entirely. My officials will be keeping a close watch on the institute's new procedures for handling complaints. It is important--the institute recognises this--that there is no repetition of such cases.
This has been a sorry tale, but I recognise that insolvency, whether it affects individuals or companies, will rarely bring much comfort, if any, to those involved. In such circumstances, insolvency practitioners have an obligation not only to apply their professional expertise but to ensure that the public interest is fully served, by acting in ways that are transparent and fair. Public confidence in the regulation system can only be maintained if the recognised professional bodies ensure that their approach to regulating their members is dedicated to the achievement of those objectives of transparency and fairness.
My Department will continue to press for improved standards within the professional bodies and among the practitioners that they regulate. I assure my hon. Friend that our aim remains a high standard of regulation in the insolvency profession. I thank him for bringing these matters to the Floor of the House.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes past Ten o'clock.
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