Ethical Code for Insolvency Practitioners

The current Insolvency Ethical Guide was introduced in January 2004 as a standardised guide for all insolvency practitioners, regardless of their authorising body.

The Joint Insolvency Committee (JIC) has recently undertaken an extensive review of the guide and comments are now invited on the outcome of its work, a revised Insolvency Ethical Code. The revised code is based, in part, on the ethical framework applied by accounting bodies.

Ultimately, the JIC will recommend a revised version of the code to all of the authorising bodies for adoption. If the JIC’s recommendation is accepted, all insolvency practitioners will continue to follow a standardised code, regardless of their authorising body.

The current Insolvency Ethical Guide provides insolvency practitioners with five principles to which insolvency practitioners must adhere, together with a list of common situations which insolvency practitioners may face. The revised code also includes five principles which have been revised from the previous guide and the new code provides more detail concerning the threats that insolvency practitioners may face in the conduct of their work. The earlier guide discussed two main types of threat, self-interest and self-review, whilst the new code also includes advocacy, familiarity and intimidation. Information is also included on potential safeguards.

The code contains examples of generic issues faced by an insolvency practitioner and also particular situations that may occur. Many of these particular examples have been carried forward from the existing guide, as the JIC believes that these are still relevant.

The code is presented as a new code because the extent of the changes makes it impractical to issue a version highlighting the changes from the existing guide. However, the JIC does not regard the revised code as substantially different to the existing guide and considers that it constitutes what most practitioners are already doing as good practice.