Dear IP Letter 58

Dear IP 58

Dear Insolvency Practitioner,

In this, the Fifty Eighth of the "Dear IP (NI)" series, I should like to deal with the following issues:

1. Companies House Begins Phased roll out of new Powers Under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act).
2. Companies House Updated Forms.
3. Some Companies House fees Increased from 1 May 2024.
4. Debt Relief Orders: Changes to Support People with Problem Debt.
5. Financial Conduct Authority – Introduction of the Consumer Duty.
6. Availability of Financial Services Compensation Scheme (FSCS) Protection for Customers of Payment and Electronic Money Firms Where a Credit Institution Holding Safeguarding Deposits Fails.
7. Impact of the R v Palmer Judgement on the Office-Holder’s Duties Under TULRCA.
8. Proof of Debts (PODs) – Evidence. 

 

1. Companies House Begins Phased roll out of new Powers Under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act).

The Economic Crime and Corporate Transparency Bill received royal assent in October 2023 and introduced 4 new objectives for the registrars:

1. to ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with),
2. to ensure information contained in the register is accurate and that the register contains everything it ought to contain,
3. to ensure that records kept by the registrar do not create a false or misleading impression to members of the public,
4. to prevent companies and others from carrying out unlawful activities or facilitating others to carry out unlawful activities.

From Monday 4 March 2024, Companies House started to use the new and enhanced powers to improve the quality and reliability of its data and tackle misuse of the companies register.

Changes introduced include:

1. new rules for registered office addresses (all companies must have an appropriate address at all times - they will not be able to use a PO Box as their registered office address),
2. a requirement for all companies to supply a registered email address,
3. a requirement for subscribers to confirm they are forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement,
4. stronger checks on company names,
5. greater powers to query information and request supporting evidence,
6. greater powers to tackle and remove factually inaccurate information,
7. the ability to share data with other government departments and law enforcement agencies.

New criminal offences and civil penalties will complement the measures introduced.

Any enquiries regarding this article should be directed to Companies House.

2. Companies House Updated Forms.

Companies House forms have been updated to reflect these changes and you should replace any existing forms that you have with the new versions. To avoid rejection, care should be taken to make sure the new forms are correctly completed:

1. It is important to make sure you are using the correct postcode and county/region in a company’s registered office address on the AD01 form.
2. There is a new tick box on the AD01 form under the ‘appropriate registered office address’ section to confirm that the new registered office address is an appropriate address. You must tick this box before submitting the form.
3. A copy of the Declaration of Solvency is required on the LIQ01 form and not the original. A new LIQ01 is available on GOV.UK for your use.

Any enquiries regarding this article should be directed to Companies House.

3. Some Companies House Fees Increased From 1 May 2024.

Companies House fees are set on a cost recovery basis. This means that the fees must cover the cost of the services Companies House delivers. Some of the fees increased on 1 May 2024:

https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/.

The work that has begun is the first step into the future of Companies House. A future where Companies House can be confident of the accuracy of the information on its registers, where it can question and investigate the information provided, and where it works with law enforcement agencies to counter economic crime.

Future changes will include the introduction of identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies – including Insolvency Practitioners.

Any enquiries regarding this article should be directed to Companies House.

4. Debt Relief Orders: Changes to Support People with Problem Debt

Changes have been made to the financial eligibility limits for Debt Relief Orders (DROs) under the Northern Ireland Debt Relief scheme, to help people in problem debt get a fresh start with their finances and access the support they need.

The following changes have been made to DROs:

1. From 17 June 2024, the £90 administration fee DRO applicants had to pay was permanently removed.
2. From 8 July 2024, the maximum amount of debt that an individual entering a DRO can hold was increased from £20,000 to £50,000, the maximum total value of the property they can have from £1,000 to £2,000 and the maximum surplus monthly income they can have from £50 to £75. These changes were made to enable more people to apply.
3. From 10 January 2025 the value of a single motor vehicle that can be disregarded from the total value of a DRO applicant’s assets was increased from £2,000 to £4,000. This will help DRO applicants retain a personal vehicle as a method of transport they rely on by increasing the value to reflect the current market better.

Insolvency Practitioners have an obligation to ensure that people in financial difficulty are provided with all relevant information to make an informed decision on the right solution for their individual circumstances. Those who supervise IVAs should consider the impact of the changes to the DRO criteria on their portfolio and if necessary, put in place a policy to review cases consistently.

When determining when to review cases, Insolvency Practitioners should look at consumers’ individual circumstances in order to decide whether this should happen immediately or at their annual review.

Any enquiries regarding this article should be directed towards Denise Anderson, Deputy Official Receiver, telephone 02890 548563, email Denise.Anderson@economy-ni.gov.uk

5. Financial Conduct Authority – Introduction of the Consumer Duty

The following Article was issued by the Insolvency Service England and Wales but is equally applicable in Northern Ireland.

The Consumer Duty introduces higher and clearer standards of consumer protection across financial services and requires firms to act to deliver good outcomes for retail customers.

FCA rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met. The Consumer Duty came into effect on 31 July 2023 for new and existing products and services that are open to sale (or renewal). From 31 July 2024, the Consumer Duty has applied to the products and services of firms held in closed books.

FCA rules, including those relevant to the Consumer Duty, continue to apply to firms in insolvency, up until their permissions are cancelled. Changes have therefore been made to FG21/4 - Guidance for Insolvency Practitioners on how to approach regulated firms (the Guidance) setting out the FCA’s expectation that IPs conduct the affairs of the firm in a way that is compatible with the Consumer Duty.

The Guidance is aimed at Insolvency Practitioners (IPs) appointed over firms solely authorised or registered by the FCA. It may also be relevant for IPs appointed over firms that are dual regulated by the FCA and Prudential Regulation Authority (PRA).

6. Availability of Financial Services Compensation Scheme (FSCS) Protection for Customers of Payment and Electronic Money Firms Where a Credit Institution Holding Safeguarding Deposits Fails

The following Article was issued by the Insolvency Service England and Wales but is equally applicable in Northern Ireland.

In March 2023, the PRA amended its rules to make FSCS depositor protection available to eligible customers of an EMI/payments institution (PI) in respect of their relevant proportion of safeguarded funds, should a credit institution holding the safeguarded deposits fail.

Changes have been made to the Guidance to reflect that whilst eligible customers of an EMI or PI may receive FSCS protection in certain circumstances where the credit institution that holds their safeguarded funds fails, IPs should avoid giving customers misleading impressions on the protection they can receive from the FSCS. This is because the availability of FSCS depositor protection depends on the particular facts of the case.

In addition, The Financial Conduct Authority has updated the Guidance to reflect that, where FSCS protection is available following the failure of a PRA authorised credit institution holding safeguarded deposits, an IP should liaise with the FSCS, including to consider whether clients/creditors need to be involved.

7. Impact of the R v Palmer Judgement on the Office-Holder’s Duties Under TULRCA

On 1 November 2023, the United Kingdom Supreme Court handed down a judgment on the Appeal of R (oao Palmer) v Northern Derbyshire Magistrates’ Court, ruling that an administrator, and by extension any other insolvency officeholder, is not an “officer” of the company under s. 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) (in Northern Ireland, Article 222(1) of the Employment Rights (Northern Ireland) Order 1996, read with section 20(2) of the Interpretation Act (Northern Ireland) 1954), as they are appointed under the Insolvency Act 1986 (Insolvency (Northern Ireland) Order 1989 rather than as a part of the company’s constitution.

Effectively, this means that administrators and other insolvency officeholders cannot be prosecuted as a secondary party under the mentioned provisions.

Practitioners should note that:

1. The judgment only affects the officeholder’s individual criminal liability and, specifically, the liability under s. 194(3) (Article 222(1).
2. The company, as employer and regardless of insolvency, remains liable to notify the Secretary of State (SoS) (in Northern Ireland, the Department for the Economy) under s. 194(1) TULRCA (in Northern Ireland, Article 222(1) of the Employment Rights (Northern Ireland) Order 1996), subject to s. 130 of and para 43(6) of Schedule B1 to the Insolvency Act 1986 (in Northern Ireland Article 110 of an para 44(5) of Schedule B1 to the Insolvency (Northern Ireland) Order 1989).
3. Officeholders should take all reasonable steps to continue to comply with s. 193 TULRCA (in Northern Ireland Article 193 of the Employment Rights (Northern Ireland) Order 1996) in any future appointments.
4. Failure to notify the SoS (in Northern Ireland, the Department for the Economy) could justify misconduct procedures by the officeholders’ regulatory body, leading to potential regulatory and disciplinary action.

The information included in these notifications is crucial to the Government’s ability to process employees’ applications for statutory redundancy pay. Timely notifications enable the Redundancy Payments Service (in Northern Ireland, the Department for the Economy’s Redundancy Payments Branch) to deal with claims efficiently, and also assist the relevant government agencies responsible for managing the re-deployment of staff, or increased benefit applications.

Enquiries regarding this article may be sent to:
RPS.Stakeholder@insolvency.gov.uk

8. Proof of Debts (PODs) – Evidence

The Insolvency Service has noted, in some recent cases, evidence to prove debts has not been saved onto ISAAC. We request that all relevant documentation i.e. PODs and evidence, not already held on ISAAC for the case, are submitted via the portal on ISAAC. Please also note the following when dealing with PODs;

1. If a POD has been received but supporting evidence has not been received, the accepted amount is the lower amount listed on the SOA/PEQ/POD.
2. If evidence is received for a debt but a POD has not been submitted then the claim should be rejected.
3. If the evidence received confirms an amount less than the amount declared on the POD, admit the lower amount.
4. If a POD is received for a debt that was not listed on the SOA/PEQ then this should not be admitted without supporting evidence.
5. When a dividend is being paid on a case, please submit any PODs and evidence, not already held on ISAAC, at the same time as you submit the dividend request. If no dividend is paid PODs and evidence should be submitted at finalisation per current instructions.

Any enquiries regarding this article should be directed towards Amanda Waring, Insolvency Practitioner Unit, telephone 02890 548629, email Amanda.Waring@economy-ni.gov.uk
 

Yours faithfully,
Pauline Brown
Principal Examiner