In June 2013 the Complaints Gateway was established to provide a single entry point for regulatory complaints against insolvency practitioners. The Insolvency Service has published an analysis of the complaints received by the Complaints Gateway in its first 12 months; the headline being an increase in complaints being made against insolvency practitioners from 748 to 941 complaints.
The Complaints Gateway acts as a first review hurdle for complaints against insolvency practitioners before complaints are referred to the various regulators – Insolvency Service, ICAEW, IPA, ACCA, ICAS and Chartered Accountants Regulatory Board – which covers 92% of all insolvency practitioners and 98% of all insolvency appointments. Solicitors currently fall outside of the Complaints Gateway but discussions are on-going with the Law Society and SRA to include solicitors within the Complaints Gateway. The Complaints Gateway considers complaints in relation to breaches of insolvency legislation, statements of insolvency practice, regulations and guidance by the regulators, and the code of ethics. On receiving a complaint the Complaints Gateway will consider that complaint and whether to seek further information, reject, or refer that complaint to an insolvency practitioner's regulator.
The Complaints Gateway received 941 complaints in its first 12 months, 699 were referred to the relevant regulator, 170 rejected and 72 were being processed at the time of the publication. Of the 699 complaints referred to regulators 190 complaints were closed on assessment. Investigations which have been concluded in relation to the remaining complaints have resulted in 3 warnings and no reprimands or fines.
The report sets out a breakdown of complaints received by reference to subject matter with the top 5 areas being: communication breakdown / failure (23%, 167 complaints), company voluntary arrangements (19%, 133 complaints), administrations and insolvent liquidations (19%, 128 complaints), breach of ethical guidance (13%, 96 complaints) and sale / dealing with assets (10%, 74 complaints). The highest number of complaints received in relation to any particular insolvency procedure were IVAs (32%) followed by administrations (25%) with complaints in relation to breaches of ethical guidance being largely in relation to conflicts of interest (40%) and professional competence and due care (35%). The origins of complaints were found to be predominantly debtors (42%) and creditors (33%).
What can we take from the Complaints Gateway's first year? There has been an increase in complaints but this may be due to the increased simplicity for complainants of using the gateway compared to complaining direct to a regulator. As a result of themes emerging from the complaints seen by the Complaints Gateway regulators are taking forward all cases for investigation where there is a delay in closing an IVA where this exceeds 6 months from the debtor's final payment.
Perhaps unsurprisingly the area which has attracted the most complaints is in relation to personal insolvencies with IVAs taking up 32% of the complaints received and 42% of the complainants being the debtors themselves.
It is promising for insolvency practitioners that the Complaints Gateway has rejected a number of complaints on assessment, but at the same time disappointing that a further 190 complaints were closed by regulators after a referral had been made to them and in circumstances where it is likely costs were incurred by the insolvency practitioner responding to the regulator.