Complaints against insolvency practitioners hold steady

The insolvency service has published the latest figures for complaints against insolvency practitioners made to the Complaints Gateway during 2016. The statistics indicate that the Gateway has received a reasonably steady level of complaints since it was established in 2013 but promisingly for practitioners the Gateway does appear to be weeding out more complaints with the Gateway having rejected 29% of complaints in 2016, compared to 18% in the Gateway's first year.

The Stats

The Complaints Gateway forms a single point of entry for complaints against insolvency practitioners, acting as a filter before complaints are passed to the now 5 recognised professional bodies – ICAEW, IPA, ACCA, CAI and ICAS (albeit that with effect from 1 January 2017 insolvency practitioners licensed by ACCA will be subject to the complaints and monitoring procedures, including the disciplinary processes, of the IPA). 

The Gateway considers complaints in relation to breaches of insolvency legislation, statements of insolvency practice, regulations and guidance from regulators, and the code of ethics.  The Gateway reviews the complaint and decides whether to reject the complaint, refer it to the relevant recognised professional body or seek further information.  In a vast majority of cases the process now also requires that the matter of concern must be raised with the insolvency practitioner first before it will be considered by the Gateway.

The newest statistics provide that 847 complaints were received by the Gateway during 2016 with 456 referred to the recognised professional body, 247 rejected and 144 on hold whilst further information was sought from the complainant.  These figures compare to 895 complaints received in 2015 and 941 in the Gateway's first full year (June 2013 to June 2014).  Before the creation of the Gateway total complaints made to the recognised professional bodies were 748 in 2013 and 578 in 2012.  The level of complaints indicates an increase in complaints against insolvency practitioners since the creation of the Gateway in June 2013, albeit that given the process for making a complaint is arguably easier for would-be complainants this is perhaps not all that surprising.

The 2016 statistics also provide that 32% of the complaints received by the Gateway related to SIP 3 (voluntary arrangements), 29% to so-called "communication breakdown / failure" and 28% breach of ethics.  These are the same top three as 2015 albeit in a different order with 32% of complaints in 2015 relating to SIP 3, 27% breach of ethics and 25% "communication breakdown / failure".  These three areas differ to the top three complaint areas in the Gateway's first year where the areas attracting complaints were 23% "communication breakdown / failure", 19% SIP 3 and 19% SIP 2 (liquidator investigations) and 13% for breach of ethics.

The insolvency process consistently attracting the most complaints is IVAs topping the table for all years since 2013.  IVAs accounted for 46% of complaints in 2016, 38% in 2015 and 32% in the Gateway's first year.  2016 also saw liquidations attract 24% of the complaints made to the Gateway, bankruptcies 12% and administrations 11%.  This broadly mirrors the 2015 complaint statistics where alongside IVAs, liquidations attracted 26% of complaints, bankruptcies 18% and administrations 10%.  This compares to the Gateway's first year where administrations attracted a higher percentage of complaints at 25%, liquidations at 21% and bankruptcies at 15%.

Across all years since 2013 debtors have accounted for the highest percentage of complainants with 54% in 2016, 48% in 2015 and 42% in the Gateway's first year.  However, perhaps the most interesting statistic is that complaints made by insolvency practitioners against other insolvency practitioners did not feature in the statistics for the Gateway's first year, but in 2015 accounted for 4% and in 2016 5% of the total number of complaints.

What can we learn from the stats?

It is difficult to read too much into the statistics for the first couple of years of the Gateway.  However, what is encouraging for practitioners from the statistics is that there appears to be an increase in the number of complaints rejected by the Gateway particularly compared to the Gateway's first full year. 

Perhaps unsurprisingly personal insolvencies attract the highest level of complaints compared to corporate insolvencies but it is interesting to note that in the last two years liquidations have attracted a greater number of complaints than administrations although there is no explanation for this in the statistics.  Less encouraging for practitioners is the increase in the referrals made to the Gateway by fellow insolvency practitioners.  It will be interesting to see what 2017's stats reveal.