It is still as important as ever to seek early insolvency advice, in order to try and avoid entering into formal insolvency proceedings – even though new FCA rules have complicated matters for the advisors who try to help you.
R3 has expressed its disappointment at the confusion caused by the new rules, which are designed to ensure that insolvency practitioners only advise on cases where the client enters into a formal insolvency procedure.
But this fails to take into account all of the cases in which early insolvency advice prevents the need for formal insolvency at all – leaving practitioners unsure of whether they can continue to provide advice in such cases.
R3 president Phillip Sykes said: “Insolvency practitioners have a duty to offer impartial advice, which means they need to talk people through all their options, from informal to statutory debt solutions.
“It is usually not clear at the outset what might be best for an individual and whilst formal insolvency can be the right solution for some, it will be a last resort for many. Early advice can help to avoid the need for a formal insolvency solution.”
Mr Sykes added that the new rules have not been interpreted correctly by the FCA in its regulatory activities – and that there is no need for authorisation for insolvency practitioners to advise on non-statutory debt solutions, but that instead authorisation should be required by those who actually provide such solutions.
“Insolvency practitioners have been giving expert, impartial advice for decades about statutory and non-statutory debt solutions; if their advice falls short of these high standards, they can expect to hear from their regulator,” he stressed.
As always, the industry will continue to provide insolvency advice in the best interests of its clients – and our own advisors will help you to understand your position, to guide you towards the debt solutions that are most likely to resolve your situation in a positive way.
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