In June 2014, the new insolvency complaints gateway celebrated its first birthday. This was followed by a report assessing its performance against a number of rather challenging ambitions. We analyse the report’s findings and the effect of the gateway to date on consumers, insolvency practitioners and their insurers.

Background

In June 2013, the Insolvency Service established a new complaints gateway, a single point of contact to receive all complaints against insolvency practitioners. Previously, complainants were required to direct their complaint to the professional’s own regulatory professional body. 

The Insolvency Service published its first annual report into the gateway in August 2014. It provided a useful summary of the way in which the gateway had performed, and how that measured up against its aims and objectives. The headlines were as follows:

  • There were 941 complaints received, nearly 200 more than in the previous 12 months
  • Of those, 699 were referred to the relevant regulatory professional body and 170 were rejected
  • 75 per cent of the complaints were made by debtors or creditors in insolvency proceedings
  • Of the 170 complaints rejected, only 2 appeals were made, and the original decisions were upheld in each instance
  • 41 per cent of the 699 complaints were referred to the Insolvency Practitioner Association and a further 41 per cent to the Institute of Chartered Accountants in
  • England and Wales (ICAEW)
  • 93 per cent of complaints referred to administrations, liquidations or bankruptcies

The Insolvency Service commented in its report that the increase in the number of complaints indicated the gateway had met one of its main aims of making the complaints process simpler to understand and use. It also expressed satisfaction that the gateway had enabled the Insolvency Service to better understand the nature of complaints about practitioners, and monitor the way in which regulatory professional bodies dealt with them. 

One of the more notable aims was to enable the Insolvency Service to identify more common trends in complaints, with a view to improving the way in which practitioners and their respective professional bodies operate. 

Another of the gateway’s loftier aims was to promote transparency in the regulatory process, and increase the confidence consumers have not just in practitioners, but in the manner in which any complaints will be addressed. The fact there were more complaints in its first year, despite the first couple of months seeing reduced usage compared to subsequent months, suggests that aim is being met. Although there was an increase in the number of complaints, when seen in the context of the number of cases handled by practitioners, the proportion of complaints remains very small indeed.

How has the gateway been received?

Practitioners seem broadly united in welcoming the gateway, although it is inevitable there will be dissent. The cost of the gateway, not just in terms of the direct costs for each complaint, but the less discernable costs of dealing with them, may well prove to be greater than under the old scheme. 

One further encouraging sign is that there were so few sanctions, although, of course, some of the complaints logged are yet to reach the point where they might be imposed. In total, only three sanctions, in each instance a formal warning, were imposed, with no complaint considered sufficiently serious to justify a reprimand or fine.

Sanctions are also published by the relevant regulatory professional body, as a further way of encouraging good practice or discouraging bad practice, and in the interests of transparency. When seen in the context of 941 complaints being received, together with the other positive indications in the report, practitioners can be excused for giving themselves a pat on the back. 

No doubt the more focussed and organised practitioners will by now have digested the outcomes and indicators arising out of the report. Combined with data from their own practices, it should be possible for them to extract important risk management lessons going forward. It will be interesting to follow whether practitioners heed those lessons and, consequently, reduce complaints and claims over the coming years.

Comment

Insurers should also be mindful of the report's outcomes and the benefits anticipated to be derived as a result of the operation of the gateway. Underwriters, either on renewal or on receiving new proposals for cover, may well wish to investigate a practice's complaints record, and the continuing operation of the gateway may well make doing so slightly easier. Increased ease in identifying general trends in complaints might also assist insurers in minimising their exposure to bad risks. Equally, the better performing insureds may find it easier to obtain cover, and perhaps also on better terms as insurers seek to attract them to their book.

Overall, the gateway clearly has the potential to be an important tool for practitioners to use in improving the way they operate. The second annual report, due in August 2015, is likely to give a more rounded impression of its impact and the benefits it will bring.