Insolvency trade body R3 has claimed the Insolvency Service is issuing misleading figures on pre-pack administrations.The Insolvency Service recently claimed that more than a third of cases in the last six months were deemed to be non-compliant when in fact just seven per cent were referred to the regulatory bodies for possible sanction.

Peter Sargent, president of R3, said: “It is irresponsible reporting by the Insolvency Service to claim that over a third of cases were judged to be non-compliant when as few as seven per cent were considered suitable for potential disciplinary action.

“Why didn’t they refer a third of the cases to the regulators? The insolvency profession is unlikely to ‘build confidence’ in pre-packs when a key part of the insolvency industry is engaging in scaremongering.”

He added that R3 appreciates that there is no room for complacency. Sargent urged the Insolvency Service to assist insolvency practitioners by providing greater clarity on what they expect from a Statement of Insolvency Practice 16 report. These reports help to regulate how pre-packs are arranged.

He added: “Despite numerous requests from practitioners there are still no ‘pro-forma’ examples of SIP 16 reports for insolvency practitioners to follow.

“Moving forward, the Insolvency Service should report with greater transparency on compliance rates and avoid misleading language that reinforces negative preconceptions.”

R3 said the Insolvency Service’s report states there have been ‘significant improvements’ in the quality and timeliness of information, which is not reflected in their press release.

Reproduced with kind permission of Credit Today  http://www.credittoday.co.uk