This year will bring significant change to the rules which govern the Insolvency profession in the areas of regulation and fees. These changes are the result of an independent review and consultation into how insolvency practitioners charge their fees, following concerns that the current system allowed excessive fees to be charged.
From October this year Insolvency practitioners will be required to provide upfront estimates of the cost of working on insolvency cases.
Practitioners will have to provide a summary of estimated costs, the work to be undertaken and, where an hourly rate is proposed, an estimate of the expected time. These estimates will act as a cap on fees as, once agreed, they can only be changed by agreement between the insolvency practitioner and those that are owed money. This will end the uncertainty of unlimited hourly charges.
Business Minister Jo Swinson said: “Insolvency practitioners do important and specialist work realising the assets of failed companies for distribution to suppliers and others owed money. Initial fee estimates, which can only be changed by agreement, will strengthen the position of those owed money to ensure that fees are fair and reasonable.”
“Increased transparency is a sensible and practical way to strengthen the hands of those owed money in an insolvency and will give insolvency practitioners the opportunity to demonstrate how their services provide value for money.”
MLG Associates welcomes this move towards greater transparency and accountability. Over the coming months we will be updating our procedures to be fully compliant with the changes in the law.
When selecting an insolvency practitioner, clients need to be aware that these changes will bring the risk of some practises over-providing in order to get around capping fees.
Our charge-out rates have always been realistic and competitive and our motivation is to provide a good return to investors. Therefore clients can be assured of our continued commitment to fair fees.