The Insolvency Code of Ethics governs two decisions an insolvency practitioner makes: whether to take an appointment at all, and how to run it once appointed. It applies to all professional work that relates to an insolvency appointment, and to any work that may lead to one. For a director, that means the code applies from the first meeting, long before anyone is appointed.
The code is issued jointly by the three recognised professional bodies that authorise insolvency practitioners: the Insolvency Practitioners Association (IPA), the ICAEW and ICAS. A revised code took effect on 1 October 2025. It replaced the version that had applied since 1 May 2020. The revision mainly clarified three areas: professional behaviour, the practitioner’s mindset, and the use of technology.
The practitioner is personally responsible for compliance. They are also expected to make sure the rest of the insolvency team works to the same standard.
The five fundamental principles
Everything else in the code hangs off five principles:
- Integrity: being straightforward and honest in every professional and business relationship.
- Objectivity: not letting bias, a conflict of interest or pressure from others override professional judgement.
- Professional competence and due care: keeping knowledge and skill up to date, and taking proper care on each case. Under the revised code, this includes checking that the output of any technology is reliable before relying on it.
- Confidentiality: not disclosing information obtained through the work unless there is proper authority or a legal or professional duty or right to do so, and not using it for personal advantage. It does not stop an office-holder reporting to creditors or reporting on the directors’ conduct, which the law requires. The revised code makes clear this covers information in any form, including electronic data.
- Professional behaviour: complying with the law and avoiding conduct that a reasonable and informed third party would say discredits the profession. The revised code adds that practitioners must treat people fairly, with respect and dignity.
Objectivity is the principle a director meets most directly. A practitioner may give you advice before an appointment. Once appointed, the same practitioner acts for the creditors as a whole, and the code expects them to be able to show that nothing from that earlier conversation has bent their judgement.
How a practitioner tests a threat
The code does not try to list every situation. It gives the practitioner a method, which it calls the conceptual framework, and requires it to be applied with an inquiring mind:
- Identify anything that could threaten compliance with the five principles.
- Evaluate whether the threat is at an acceptable level, judged by what a reasonable and informed third party would conclude, not by what the practitioner feels.
- Address it: remove the circumstances causing it, apply safeguards, or decline or end the work.
The third option is the one that matters. Where no safeguard can bring a threat down to an acceptable level, the answer is not to manage it. It is to decline the appointment.
The five kinds of threat
The code groups threats into five categories. In an insolvency, they tend to look like this:
- Self-interest: a financial or other interest of the practitioner, the firm or someone close to them could affect a decision on the case.
- Self-review: the practitioner would have to assess work that their own firm did earlier, such as advice given to the company before it failed.
- Advocacy: the practitioner or firm has promoted one party’s position so far that later objectivity is in doubt.
- Familiarity: a long or close relationship makes the practitioner too sympathetic, or too hostile, to someone’s interests.
- Intimidation: actual or perceived pressure deters the practitioner from acting objectively.
Prior relationships with the company
Before accepting an appointment, a practitioner must look at any previous professional or personal relationship between their firm and the company, its directors or its main creditors. Some relationships can be managed. Some cannot.
Recent audit work for the company is one of the relationships the code treats most seriously. It will usually stop the firm taking an insolvent appointment. If your company’s auditors also run an insolvency practice, expect them to raise this at the first meeting, not after.
Who enforces the code
Each practitioner’s authorising body monitors compliance and can discipline a practitioner who breaches the code. The Insolvency Service oversees those bodies on behalf of the Secretary of State.
In September 2023 the government decided not to create a single regulator for insolvency practitioners. It did confirm that the Secretary of State will take over responsibility for setting ethical and professional standards. As of the Insolvency Service’s 2025 annual review of practitioner regulation, that change was still to come, so the code in force is the one issued by the three professional bodies.
If you think a practitioner has fallen short, the route is a complaint to the practitioner first, then through the Insolvency Complaints Gateway. Our guide to complaints about practitioners sets out how that works.
What the code means for a director
The code works in the director’s favour and against the director’s hopes, both at once. It means the practitioner will be straight about what a procedure involves. It also means they cannot trade favourable treatment for the instruction.
A practitioner appointed as liquidator or administrator must report to the Secretary of State on the conduct of everyone who was a director in the three years before the insolvency, within three months. No practitioner bound by this code can promise you how that report will read. One who does is telling you something the code does not allow.
The code sits alongside the practitioner’s legal duties. For the wider set, see a practitioner’s wider obligations and their fiduciary duties. If you are choosing a practitioner now, our guide on how to choose a practitioner covers the questions to ask.
AABRS® is a firm of licensed insolvency practitioners bound by this code. To talk through your company’s position before an appointment is made, call 0208 444 3400.