Insolvency Service Updates
R3 welcomes the recent updates from the Insolvency Service on the workings of the RPS and the monitoring of volume individual voluntary arrangement and protected trust deed providers. The below highlights the key aspects of both publications, however, we encourage members to read the guidance in full.
Redundancy Payments Service (‘RPS’)
The Insolvency Service have released an update on what the RPS have been doing to work through employee claims and associated queries following the issues encountered after the introduction of a new case management system. Update here.
Key aspects to note –
- Claims Processing – Most technical issues affecting claims processing have been resolved. Almost 90% of RP1 claims waiting processing are from August or September 2019. RPS is confident that within a matter of weeks they will be operating at 95% of claims being processed within 6 weeks.
- New case setup – When setting up a new case, please ensure that it is listed as “insolvent” rather than “solvent”. Claims on solvent cases will be automatically rejected.
- Customer Services – IP helpline continues to remain open all day. Call between 1pm and 5pm, when call queues are expected to be shorter.
- Proofs of Debt – Work has resumed on proofs of debt for cases with payments made before 17 March 2019. New excel format. Technical issues are still impacting on cases processed on the new system, post 17 March 2019.
- Pension claims – Initially on hold but work has now started to deal with outstanding claims – 8 week timeframe to process.
- Insolvency Practitioner Upload Service (IPUS) – Further guidance on how to use the IPUS here.
Monitoring Volume Individual Voluntary Arrangement and Protected Trust Deed providers
The Insolvency Service has released updated guidance for these types of providers. Guidance is available here.
Key aspects to note –
- Definition – A volume provider is defined as a firm that controls greater than 2% of the total market (including new and existing cases), or 10% for PTDs or greater than 2% of new cases over a three-month period.
- Frequency – The Insolvency Service would expect annual (or even more frequent) monitoring visits to these types of firms.
- Approach – RPBs should take a risk-based approach in determining the format of each visit. RPBs are expected to review introducer agreements on a risk-based approach and ensure that IPs are regularly reviewing the agreements.
- Responsibility – The IP Remains responsible for all IVAs on which he or she appointed and is personally liable for all trust deeds and PTDs they are trustee for.
- Relationships – The IP will not necessarily be the owner or an equity partner of the volume provider and may have no direct control over the development or management of the business. In this situation, the RPB inspection team must establish, understand and document the contractual relationships between the provider and its IPs, and must review employment contracts or relevant terms of engagement.
- Introducers – RPBs are expected to review introducer agreements on a risk-based approach and ensure that IPs are regularly reviewing the agreements.
- Acquisition of a block of new cases – The RPB inspection team must assess whether the IP has the necessary resources and experience to deal with the increased case load.
- Systems and controls – An inspection of the systems will form a more significant part of the monitoring process than in a traditional insolvency practice.
- Estate accounts – Each annual monitoring cycle must include a detailed review of estate accounts and the procedures for access and authority for making payments.
- Procedures for dealing with any compensation – Consumers in IVAs or PTDs may be affected by claims for mis-selling of financial products that may result in compensation. The RPB inspection team must review procedures for dealing with any compensation.
- Case files – Must be examined to test whether the business model, systems and controls work in practice.