Insolvency Practitioners are required to meet high standards of professional conduct. In order to practice as an insolvency practitioner, you need to be licensed under the Insolvency Act 1986, which means being a member of a Recognised Professional Body (RPB) and having passed the JIEB exams. Once you’re licensed, there are a number of ongoing obligations that you have to fulfil in your professional conduct.
Insolvency Code of Ethics
All insolvency practitioners have to abide by the Insolvency Code of Ethics. The code sets out the obligations expected of insolvency practitioners and provides practical guidance about how they can fulfil those obligations. The code must be applied to all professional work that may lead to or that involves an insolvency appointment.
Although insolvency practitioners are individually licensed, they should, wherever possible, ensure that the code is fulfilled by all members of the insolvency team.
Fundamental Principles
The code sets out five fundamental principles that insolvency practitioners are required to comply with at all times.
- Integrity. The insolvency practitioner must be straightforward and honest in their professional and business relationships.
- Objectivity. The insolvency practitioner shall take an objective approach to their work and ensure that they are not biased or allow conflicts of interest or undue influence to override their professional decisions and judgements.
- Professional Competence and Due Care. The insolvency practitioner has an obligation to ensure they are professionally competent to undertake all insolvency appointments that they are engaged on and must take due care when carrying out any insolvency appointment. They must ensure that they are in line with up-to-date knowledge, legislation and market practice.
- Confidentiality. An insolvency practitioner has a duty of confidentiality to their client. They must ensure that they do not disclose any confidential information acquired in the course of any insolvency appointment or as a result of their professional relationship. They must also ensure that they do not use any confidential information obtained in the course of their business or professional relationships to personally profit or for the profit of a third party.
- Professional Behaviour. Insolvency practitioners should behave professionally and ensure that their behaviour reflects the high standards of the profession. This includes acting with courtesy and consideration towards those they come into contact with during their work.
Application of the Fundamental Principles
The fundamental principles are given so that insolvency practitioners can apply them to any situation that they might find themselves in, rather than an exhaustive rules-based approach that could cause uncertainty for any situations that aren’t explicitly dealt with.
Practitioners are expected to take reasonable steps to identify any threats to their compliance with the fundamental principles. Once identified, they should evaluate those threats and respond in an appropriate manner. It may be that there are safeguards that they can put into place to ensure they are compliant with the fundamental principles, or it may be that they have to decline to act on the insolvency appointment because of the threat to compliance.
Regulation by Regulated Professional Body
In addition, the RPB of which the insolvency practitioner is a member may have additional rules that the practitioner has to fulfil in order to comply with their membership obligations.
The recognised RPBs for insolvency practitioners are as follows:
- Insolvency Practitioners Association
- Institute of Chartered Accountants of England and Wales
- Institute of Chartered Accountants in Scotland
- Institute of Chartered Accountants in Ireland
Want to Speak to an Insolvency Practitioner?
If you want to speak to an insolvency practitioner, we’re always happy to help. As you can see above, we’re bound by a duty of confidentiality, so you can feel assured that we will try and help you resolve your company’s financial matters in a discreet and professional manner.