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What’s your succession plan?

Author: Professional Standards Department

Published: 10 Aug 2023

The Insolvency Guidance Paper (IGP) on Succession Planning is being updated. It’s a good place for insolvency practitioners (IPs) to start when putting contingency and succession plans in place to future-proof their professional interests.

No one particularly likes to think about their own mortality or what might happen if they were incapacitated in some way.

That opening sentence may sound like one of those tacky adverts that crop up on the more obscure TV channels. But for a professional, it’s really important to have arrangements in place to deal with incapacity or death so that everyone knows what to do and your family and staff aren’t left to pick up the pieces at what will already be a very difficult time for them. It could be said that for IPs, these kinds of arrangements are even more important, given the personal nature of insolvency appointments. It’s not as if someone else can just pick up a file and carry on with the assignment and make strategic decisions and file statutory documents.

The recognised professional bodies (RPBs) and the Insolvency Service have recently been doing some work around contingency planning. One of the outcomes of that work is that the Joint Insolvency Committee has agreed to refresh the Insolvency Guidance Paper (IGP) on Succession Planning. There’s nothing fundamentally wrong with the Succession Planning IGP, but it’s a good time to revisit it given the other work that is going on. And by extension, it’s also timely to remind IPs to think about their succession plans.

Firstly, do you have a plan in place? If you do, that’s great, but when did you last review it? Has anything changed since the plan was drawn up? If you have an alternate arrangement in place, are you sure your alternate is still willing to act? When were you last in touch? Is there any new information you need to share with your alternate?

What if you have no plan in place?

What if you have no plan in place? It’s not a requirement to have a succession plan in place or to have an alternate (unless you’re a sole practitioner holding clients’ money). But it’s sensible to have one, to save those closest to you any additional stress and worry.

The Succession Planning IGP is a good place to start to get some pointers. ICAEW also has other guidance which is just as applicable to IPs, as those in general practice.

Some key things to think about are:

  • appointing an alternate;
  • granting someone power of attorney to deal with incapacity; and
  • making a will and thinking about your choice of executor.

A professionally qualified executor who understands how a practice works may be a good option.

Two out of the three things on that list are going to involve getting some legal advice, but even appointing an alternate will be a good start. We all know that insolvency appointments in someone’s sole name will need to be transferred by the Court if the original office holder can no longer act, but having an alternate in place means that there is someone around who can deal with administrative matters and talk to ICAEW and others. And often, the alternate will be the first port of call if an RPB is looking to transfer cases by block transfer.

Reviewers in the Quality Assurance Department (QAD) may be asking you about your succession plans on visits, and if you’re a sole practitioner, we may be getting in touch asking for specific information about your succession plans.

There’s another angle to this issue, too. It could be that you’ve agreed to be someone else’s alternate. Are you sure you still want to do that? If it’s been a while since you agreed to act, the other IP’s circumstances may have changed. It’s worthwhile keeping in touch with the other IP because you may find yourself taking on something that is very different from what you thought you’d signed up for. Could you deal with someone else’s portfolio, and maintain proper oversight of your own cases? An awkward conversation now may avoid problems in the future.