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The OFT’s Market Study into Corporate Insolvency: An Overview.

The OFT’s Market Study into Corporate Insolvency: An Overview. Sue Aspinall. Research objectives. Scope: the market for Corporate Insolvency Practitioners. Findings based on six main strands of research. 3. In effect, secured creditors chose the IP

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The OFT’s Market Study into Corporate Insolvency: An Overview.

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  1. The OFT’s Market Study into Corporate Insolvency:An Overview. Sue Aspinall

  2. Research objectives Scope: the market for Corporate Insolvency Practitioners

  3. Findings based on six main strands of research 3

  4. In effect, secured creditors chose the IP • IPs need to maintain good relationship with banks • Results in good oversight of IP’s actions • Confirmed by CH data and stakeholder evidence Findings Summary Finding Reason & Evidence • Unsecured creditors possess little ability to influence insolvency process despite the formal procedures • They also lack the expertise and incentive to do so • Confirmed by CH data, surveys and stakeholder evidence • Shown via econometric analysis of 500 insolvencies gathered from Companies House dataset • Confirmed by IPs via the sharing of early findings and some limited stakeholder evidence • Multiple RPBs and duplicative role of IS hinders effective and consistent censure of poor performance • Confirmed by a survey of IPs by trade association and stakeholder evidence • Extensive prescriptive regulation lacks clear focus • Regulatory system (with multiple overlapping bodies) poorly reflects way in which market operates • Confirmed by stakeholder evidence, surveys and desk-based research

  5. What is the resulting harm? 5

  6. Remedies Summary Remedy Effect • Restoration of trust, increased consistency of sanctioning and firmer treatment of rogue IPs • Increased ability to challenge fees by avoiding the prohibitively expensive court route • Regulation better aligned with the interests of all creditors, protection of more vulnerable creditors and encouraging competition • IS better able to ensure RPBs meet regulatory objectives via use of proportionate sanctioning powers and vetos • New regulatory changes proposed and voted on only by those possessing a direct interest in making the right decision and in proportion to their membership • In order to ensure that creditors other than the banks possess more ability to control and influence the insolvency process

  7. What we think the market will look like Economic growth and efficiency 7

  8. Next steps • OFT report considered by BIS and other Government departments. • We believe they will benefit the wider economy, increase trust and demand for insolvency practitioners, and impose no extra burden on the taxpayer. • The OFT will keep a small team in place to take part in the discussion. 8

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