Under the Joint Insolvency Committee’s (JIC’s) strategic work plan Statements of Insolvency Practice (SIPs) are subject to periodic review in order to ensure they remain relevant to changing legislation and market conditions. Following consultations with the profession and other stakeholders, including the Insolvency Service, HMRC and major creditor representatives, a revised version of Statement of Insolvency Practice 3.1 – Individual Voluntary Arrangements (SIP 3.1), has now been approved by the JIC and the Recognised Professional Bodies for implementation with effect from 1 March 2023.
Summary of Changes
The principal changes in the revised SIP 3.1 relate to the degree of emphasis on the insolvency practitioner’s responsibility to ensure that the debtor has received suitable advice prior to entering an IVA and during its implementation. This includes ensuring that the debtor is aware of all potential debt relief solutions available and that they are provided with adequate time to think about the consequences and the options available before instructing an IVA to be drawn up.
Where the debtor comes to the insolvency practitioner (IP) through a referrer, the IP should make themselves aware of the nature and extent of the advice previously given to the debtor and collect evidence of such advice. The IP should ascertain whether referrers that have advised the debtor are FCA authorised or exempt for debt advice purposes and document their status. If there are any shortcomings in the advice the IP is required to provide the appropriate advice themselves.
The revised SIP 3.1 incudes a greater emphasis on documenting the process, including, where appropriate, advice calls, and on providing information to creditors that is more extensive and useful to them than before.
There is also a focus on providing tailored information and advice relevant to the debtor’s particular circumstances rather than relying on generic explanations and standardised texts.
Publication and Implementation
The revised SIP 3.1 will apply to IVAs where the Nominee is appointed on or after 1 March 2023.