As a reminder, the Insolvency Service\u2019s report on 2017 monitoring can be found at: https:\/\/tinyurl.com\/ycndjuxz<\/a><\/p>\n <\/p>\n The picture becomes cloudy<\/strong><\/p>\n As can be seen on the Insolvency Service\u2019s dedicated RPB-monitoring web-page – https:\/\/www.gov.uk\/government\/collections\/monitoring-activity-reports-of-insolvency-practitioner-authorising-bodies<\/a> – their efforts to review systematically each RPB\u2019s regulatory activities seemed to grind to a halt a year ago.\u00a0 The Service did report last year that their \u201cfuture monitoring schedule\u201d would be \u201cdetermined by risk assessment and desktop monitoring\u201d and they gave the impression that their focus would shift from on-site visits to \u201cthemed reviews\u201d.\u00a0 Although their annual report indicates that such reviews have not always been confined to the desk-top, their comments are much more generic with no explanation as to how specific RPBs are performing \u2013 a step backwards, I think.<\/p>\n \u00a0<\/strong><\/p>\n Themed review on fees<\/strong><\/p>\n An example of this opacity is the Service\u2019s account of their themed review \u201cinto the activities, and effectiveness, of the regulatory regime in monitoring fees charged by IPs\u201d.<\/p>\n After gathering and reviewing information from the RPBs, the InsS reports: \u201cRPBs responses indicate that they have provided guidance to members on fee matters and that through their regulatory monitoring; fee-related misconduct has been identified and reported for further consideration\u201d.<\/p>\n For this project, the InsS also gathered information from the Complaints Gateway and has reported: \u201cInitial findings indicate that fee related matters are being reported to the IP Complaints Gateway and, where appropriate, being referred to the RPBs\u201d.<\/p>\n Ohhhkay, so that describes the \u201cactivities\u201d of the regulatory regime (tell us something we don\u2019t<\/em> know!), but how exactly does the Service expect to review their effectiveness<\/em>?\u00a0 The report states that their work is ongoing.<\/p>\n Don\u2019t get me wrong, it\u2019s not that I necessarily want <\/em>the Service to dig deeper.\u00a0 For example, if the Service\u2019s view is that successful regulation of pre-packs is achieved by scrutinising SIP16 Statements for technical compliance with the minutiae of the disclosure checklist, I dread to think how they envisage tackling any abusive fee-charging.\u00a0 It\u2019s just that, if the Service thinks that they are really getting under the skin of issues, personally I hope they are doing far more behind the scenes\u2026 especially as the Service is surely beginning to gather threads on the question of whether the world would be a better place with a single regulator.<\/p>\n So let\u2019s look at the stats\u2026<\/p>\n <\/p>\n How frequently are you receiving monitoring visits?<\/strong><\/p>\n There is a general feeling that every IP will receive a monitoring visit every three years.\u00a0 But is this the reality?<\/p>\n This shows quite a variation, doesn\u2019t it?\u00a0 For two years in a row, significantly less than one third of all IPs were visited in the year.\u00a0 Does this mean the RPBs have been slipping from the Principles for Monitoring\u2019s 3-year norm?<\/p>\n The spiky CAI line in particular demonstrates how an RPB\u2019s visiting cycle may mean that the number of visits per year can fluctuate wildly, but how nevertheless the CAI\u2019s routine 3-yearly peaks and troughs suggest that in general that RPB is following a 3-yearly schedule.\u00a0 So what picture do we see, if we iron out the annual <\/em>fluctuations?<\/p>\n This looks more reasonable, doesn\u2019t it?\u00a0 As we would expect, most RPBs are visiting not-far-off 100% of their IPs over three years\u2026 with the clear exceptions of CAI, which seems to be oddly enthusiastic, and the ICAEW, which seems to be consistently ploughing its own furrow.\u00a0 This may be the result of the ICAEW\u2019s style of monitoring large firms with many IPs, where each year some<\/em> IPs are the subject of a visit, but this may not mean that all<\/em> IPs receive a visit in three years.\u00a0 Alternatively, could it mean they are following a risk-based monitoring programme..?<\/p>\n There are benefits to routine, regular and relatively frequent monitoring visits for everyone, almost irrespective of the firm\u2019s risk profile: it reduces the risk that a serious error may be repeated unwittingly (or even deliberately).\u00a0 However, this model isn\u2019t an indicator of Better Regulation (see, for example, the Regulators\u2019 Compliance Code at https:\/\/www.gov.uk\/government\/publications\/regulators-compliance-code-for-insolvency-practitioners<\/a>).\u00a0 With the InsS revisiting their MoU (and presumably also the Principles for Monitoring) with the RPBs, I wonder if we will see a change.<\/p>\n <\/p>\n Focussing on the Low-Achievers?<\/strong><\/p>\n The alternative to the one-visit-every-three-years-irrespective-of-your-risk-profile model is to take a more risk-based approach, to spend one\u2019s monitoring efforts on those that appear to be the highest risk.\u00a0 This makes sense to me: if a firm\/IP has proven that they are more than capable of self-regulation \u2013 they keep up with legislative changes, keep informed even of the non-legislative twists and turns, and don\u2019t leave it solely to the RPBs to examine whether their systems and processes are working, but they take steps quickly to resolve issues on specific cases and across entire portfolios and systems \u2013 why should licence fees be spent on 3-yearly RPB monitoring visits, which pick up non-material non-compliances at best?\u00a0 Should not more effort go towards monitoring those who seem consistently and materially to fail to meet required standards or to adapt to new ones?<\/p>\n But perhaps that\u2019s what being done already.\u00a0 Are many targeted visits being carried out?<\/p>\n It seems that for several years few targeted visits have been conducted, although perhaps the tide is turning in Scotland and Ireland.\u00a0 The ACCA also performed a number, although now that the IPA team is carrying out monitoring visits on ACCA-licensed IPs, I\u2019m not surprised to see the number drop.<\/p>\n It seems that targeted visits have never really been the ICAEW\u2019s weapon of choice.\u00a0 At first glance, I was a little surprised at this, considering that their monitoring schedule seems less 3-yearly rigid than the other RPBs.\u00a0 Aren\u2019t targeted visits a good way to monitor progress outside the routine visit schedule?\u00a0 Evidently, the ICAEW is not using targeted visits to focus effort on low-achievers.\u00a0 Perhaps they are tackling them in another way\u2026<\/p>\n <\/p>\n Wielding Different Sticks<\/strong><\/p>\n I think this demonstrates that the ICAEW isn\u2019t lightening up: they may be carrying out less frequent monitoring visits on some IPs, but their post-visit actions are by no means infrequent.\u00a0 So perhaps this indicates that the ICAEW is<\/em> focusing its efforts on those seriously missing the mark.<\/p>\n The ICAEW\u2019s preference seems to be in requiring their IPs to carry out ICRs.\u00a0 Jo\u2019s and my experiences are that the ICAEW often requires those ICRs to be carried out by an external reviewer and they require a copy of the reviewer\u2019s report to be sent to the ICAEW.\u00a0 They also make more use than the other RPBs of requiring IPs to undertake\/confirm that action will be taken.\u00a0 I suspect that these are often required in combination with ICR requests so that the ICAEW can monitor how the IP is measuring up to their commitments.<\/p>\n And in case you\u2019re wondering, external ICRs cost less than an IPA targeted visit (well, the Compliance Alliance\u2019s do, anyway) and I like to think that we hold generally to the same standards, so external ICRs are better for everyone.<\/p>\n In contrast, the IPA appears to prefer referring IPs for disciplinary consideration or for further investigation (the IPA\u2019s constitution means that technically no penalties can arise from monitoring visits unless they are first referred to the IPA\u2019s Investigation Committee).\u00a0 However, the IPA makes comparatively fewer post-visit demands of its IPs.\u00a0 But isn\u2019t that an unfair comparison, because of course the ICAEW carried out more monitoring visits in 2017?\u00a0 What\u2019s the picture per <\/em>visit?<\/p>\n <\/p>\n No better and no worse?<\/strong><\/p>\n Hmm\u2026 I\u2019m not sure this graph helps us much.\u00a0 Inevitably, the negative outcomes from monitoring visits are spiky.\u00a0 We\u2019re not talking about vast numbers of RPB slaps here (that\u2019s why I\u2019ve excluded the smaller RPBs \u2013 sorry guys, nothing personal!) and the \u201cAll\u201d line (which does include the other RPBs) does illustrate a smoother line overall.\u00a0\u00a0 But the graph does suggest that ICAEW-licensed IPs are over three times as likely to receive a negative outcome from a monitoring visit than IPA-licensed IPs.\u00a0 <\/strong><\/p>\n Before you all get worried about your impending or just-gone RPB visit, you should remember that a single monitoring visit can lead to more than one negative outcome.\u00a0 For example, as I mentioned above, the RPB could instruct an ICR or targeted visit as well as requiring the IP to make certain undertakings.\u00a0 One would hope that much less than 25% of all IPs visited last year had a clean outcome!<\/p>\n This doubling-up of outcomes may be behind the disparity between the RPBs: perhaps the ICAEW is using multiple tools to address a single IP\u2019s problems more often than the other two RPBs\u2026 although why should this be?\u00a0 Alternatively, perhaps the ICAEW\u2019s record again suggests that the ICAEW is focusing their efforts on the most wayward IPs.<\/p>\n <\/p>\n Choose Your Poison<\/strong><\/p>\n I observed in my last blog (https:\/\/thecompliancealliance.co.uk\/blog\/news\/ip-regulation-complaints\/<\/a>) that the complaints <\/em>outcomes indicated that the IPA was far more likely to sanction its IPs over complaints than the ICAEW was.\u00a0 I suggested that maybe this was because the IPA licenses more than its fair share of IVA specialists.\u00a0 Nevertheless, I find it interesting that the monitoring <\/em>outcomes indicate the opposite: that the ICAEW is far more likely to sanction on the back of a visit than the IPA is.<\/p>\n Personally, I prefer a regime that focuses more heavily on monitoring than on complaints.\u00a0 Complaints are too capricious: to a large extent, it is pot luck whether someone (a) spots misconduct and (b) takes the effort to complain.\u00a0 As I mentioned in the previous blog, the subjects of some complaints decisions are technical breaches\u2026 and which IP can say hand-on-heart that they\u2019ve never committed similar?<\/p>\n Also by their nature, complaints are historic \u2013 sometimes very <\/em>historic \u2013 but it might not matter if an IP has since changed their ways or whether the issue was a one-off: if the complaint is founded, the decision will be made; the IP\u2019s later actions may just help to reduce the penalty.<\/p>\n In my view, the monitoring regime is far more forward-looking and much fairer.\u00a0 Monitors look at fresh material, they consider whether the problem was a one-off incident or systemic and whether the IP has since made changes.\u00a0 The monitoring process also generally doesn\u2019t penalise IPs for past actions, but rather what\u2019s important are the steps an IP takes to rectify issues and to reduce the risks of recurrence.\u00a0 The process enables the RPBs to keep an eye on if, when and how an IP makes systems- or culture-based changes, interests that are usually absent from the complaints process.<\/p>\n <\/p>\n Next blog: SIP16, pre-packs and other RPB pointers.<\/p>\n","protected":false},"excerpt":{"rendered":" As promised, here are my thoughts on the RPBs\u2019 2017 monitoring activities, as reported by the Insolvency Service: The InsS goes quiet on RPBs\u2019 individual performances Two RPBs appear to have drifted away from 3-yearly visits The RPBs diverge in … Continue reading ![\"1711\"](\"https:\/\/thecompliancealliance.co.uk\/blog\/wp-content\/uploads\/2018\/07\/1711.jpg\")
<\/a><\/p>\n![\"1711a\"](\"https:\/\/thecompliancealliance.co.uk\/blog\/wp-content\/uploads\/2018\/07\/1711a-300x142.png\")
<\/a><\/p>\n![\"1712\"](\"https:\/\/thecompliancealliance.co.uk\/blog\/wp-content\/uploads\/2018\/07\/1712.jpg\")
<\/a><\/p>\n![\"1713\"](\"https:\/\/thecompliancealliance.co.uk\/blog\/wp-content\/uploads\/2018\/07\/1713.jpg\")
<\/a><\/p>\n![\"1714\"](\"https:\/\/thecompliancealliance.co.uk\/blog\/wp-content\/uploads\/2018\/07\/1714.jpg\")
<\/a><\/p>\n