29 January 2016
This section inserts new Articles 350O, 350P, 350Q and 350R into the Insolvency Order. These new Articles introduce the power for the Department to apply to the High Court for a direct sanctions order against an insolvency practitioner when it is in the public interest for the Department to take such action.
New Article 350O sets out the sanctions that the Court may impose, if certain conditions set out in new Article 350Q are satisfied (see below), which include requiring the relevant recognised professional body to take the necessary steps to ensure that:
the insolvency practitioner is no longer authorised to act as such;
the insolvency practitioner is no longer fully authorised to act, but may be partially authorised to act as specified;
the insolvency practitioner’s authorisation is suspended;
other restrictions (as specified in the Court order) are placed on the insolvency practitioner while so acting; and
the insolvency practitioner repays to particular creditors part of what he/she has received or expects to receive as remuneration from a particular case.
The Department will not be able to seek a direct sanctions order against an insolvency practitioner whose authorisation to act as an insolvency practitioner is or was granted by the Secretary of State in Great Britain. This is because the Department is not responsible for overseeing the regulation of such insolvency practitioners.
New Article 350P sets out that the Department should only apply to the Court for a direct sanctions order if it appears to the Department that it would be in the public interest for the order to be made. As part of its consideration of the application, the Court will have regard to what, if any, disciplinary action the relevant recognised professional body may have taken against the insolvency practitioner.
New Article 350Q sets out the conditions that must be satisfied before the Court will impose a direct sanctions order. Of these conditions the first must be satisfied (that is that the person acting as an insolvency practitioner has not complied with the rules of their profession) and at least one other. The other conditions include: that the person is not a fit and proper person to act as an insolvency practitioner; the person is not a fit and proper person to act as a fully authorised insolvency practitioner (but could be to partially act); that creditors have suffered a loss as a result of the insolvency practitioner’s failure to comply with the rules of their profession.
New Article 350R allows the Department to give a direction to the relevant recognised professional body in relation to a person acting as an insolvency practitioner who is authorised by them, to impose any sanction available under a direct sanctions order, provided the insolvency practitioner has consented to this. This would occur instead of the Department applying to the Court for a direct sanctions order. The conditions set out in 350Q also apply to a direct sanctions direction.