Insolvency fee plan will help provide transparency and show value
In 2013, Professor Elaine Kempson was appointed to look at the charging structure of insolvency practitioner fees and how creditor concerns might be addressed. Her report showed that where secured creditors had been fully paid and only unsecured creditors were still involved the controls did not work as they should, which resulted in fees being considerably higher.
Subsequent to the review the government has introduced rules requiring insolvency practitioners, when charging time costs, to provide creditors with an upfront fee estimate, detailing what work will be done, by whom and how long it will take. Once agreed, these fees cannot be increased without agreement from the creditors, essentially putting a cap on the fees.
These measures will increase transparency for creditors as they will have a much clearer indication of what the likely fees and costs of dealing with an insolvency will be. The provision of clear information, setting out what work will be done and what it will cost to undertake that work, will also give creditors more knowledge when agreeing fees and better equip them to challenge fees where they appear unreasonable. The measures also give insolvency practitioners the opportunity to demonstrate to creditors what they do and the value they deliver in return for their fees.
Read Professor Kempson's review [External link to gov.uk website]