The government has launched a consultation on the current regulatory framework for insolvency practitioners, which includes considering whether to establish a single regulator for the sector.

It is suggested that an independent regulator could replace the profession’s reliance on recognised professional bodies (RPBs).

The Insolvency Service consultation seeks views on the impact of the regulatory objectives introduced by the Small Business Enterprise and Employment Act 2015 (SBEE Act) in October 2015, and whether there is a need to make further changes to the regulatory landscape.

Stakeholders are also being asked to assess whether there would be potential benefits in making changes to the current system, including establishing a single regulator for insolvency practitioners.

The regulatory objectives in the SBEE Act were designed to provide insolvency regulators with a clearer, enhanced framework within which to carry out their functions of authorising and regulating the insolvency profession. The overall aim of the regulatory objectives was to improve confidence in the regulation of insolvency practitioners.

At the time, provision was made for the Secretary of State to have the power to create a single, independent regulatory body in place of the current RPBs. This power expires in October 2022.

The five RPBs are: ACCA, Chartered Accountants Ireland (CAI), Insolvency Practitioner Association (IPA), ICAEW and ICAS. Of these, ICAEW (794) and IPA (551) regulate the largest proportion of insolvency practitioners.

Sarah Albon, chief executive of the Insolvency Service, said: “Insolvency is an important part of a dynamic economy and having an accountable and well-regulated insolvency profession is absolutely vital to ensure creditors and members of the public have confidence in the system.

“We welcome responses that can give us evidence on how the current system is working, including any suggestions stakeholders may have on how we can improve the regulatory framework.”

Duncan Swift, president of the insolvency and restructuring trade body R3, said: “A key question is not just how the regulatory framework is structured, but what it achieves. From our perspective, regulation should be fair and proportionate, transparent, effective at addressing shortcomings, efficient in reaching decisions, flexible enough to keep pace with innovation, and, above all, consistent.

“The existing regulatory framework is well-established and the insolvency and restructuring profession is subject to close scrutiny by its regulators.”

He added: “Effective regulation helps the profession get on with the job of promoting economic regeneration, resolving financial distress for businesses and individuals, saving jobs, and creating the confidence and public trust which underpin trading, lending and investment.”

The consultation closes on 4 October.