JIC undertook a consultation issued in May 2020 which included revisions to SIP 3.1. At that time these revisions had been identified as being relevant changes as part of a review of SIP 3.2 on Company Voluntary Arrangements. No detailed review of SIP 3.1 was carried out at that time. This consultation builds on the work carried out in 2020 and the draft revised SIP 3.1 now being consulted follows a detailed review of SIP 3.1.
The detailed review was carried out by a working group of the Joint Insolvency Committee which comprised of insolvency professionals and other participants in the individual voluntary arrangement (IVA) process, including HMRC and the Insolvency Service.
SIP 3.1 was last updated in 2014, since that date the IVA market has changed considerably both in terms of the numbers of IVAs commencing each year (2014 c. 51,000 to 2019 c. 78,000 ) and with the growth of ‘Volume Providers’(VPs).
Although operating within the same statutory and regulatory framework as other insolvency practitioners, the VPs apply a different business model which relies on a standardised product and computer assisted case management to client debtors’ demand for IVAs.
There has also been a growth in providers of pre-insolvency services. These include lead generators and debt packagers, some activities of which are regulated by the Financial Conduct Authority (FCA).
The draft revised SIP 3.1 places more emphasis on the advice stage of the debt solution process and aims to make an Insolvency Practitioner’s (IP’s) responsibility to have procedures in place to ascertain whether the debtor has received adequate and appropriate advice on the options available to them more explicit.
The draft 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.
The consultation commenced on 12 August 2021 and will be open for a period of 12 weeks, closing on 5 November 2021.
The JIC recognises that these are testing times, these are, however, only proposed changes. There is no intention to amend SIP 3.1 without careful consideration of the responses received and any plan to introduce changes will take into account any continuing challenges faced by the insolvency profession.
The JIC is now seeking your views on the proposed changes to SIP 3.1 and there is an opportunity in the consultation questionnaire to suggest other changes to SIP 3.1.
SIP 3.1 applies in England and Wales and Northern Ireland. A separate review of SIP 3.3 on Trust Deeds and which applies in Scotland is being undertaken and will be subject to a separate consultation in due course.