Warning: this blog post may lead to disappointment.
I know that I am not alone in feeling that SIP9 poses as many questions as it answers. To be fair, much of our dissatisfaction originates from inadequate rules, but the fact that my earlier post, “SIP9 – the easy bits” (http://goo.gl/Xu7DM4), generated contrary feedback indicates to me just how much clarification is needed.
Regrettably, I don’t have the answers, certainly not here and now. I could offer my best guesses, but my opinions don’t count. We need to know how the RPBs will measure compliance with the SIP and how they want SIP9 applied. I’m currently waiting for answers to a number of questions I’ve put to some RPB monitors, but I do hope that the regulators – via monitors, committees or the Insolvency Service – issue guidance publicly, so that all IPs and insolvency professionals can benefit. Allison Broad, ICAEW, has made a fantastic start with her webinar, but SIP9 raises far more questions.
What are the questions?
Here are what I think are some of the tricky bits of SIP9:
- How does SIP9’s statement that “an IP is not precluded from providing information, including a fee estimate, within pre-appointment communications” fit with the rules’ requirement that the office-holder must give the information to creditors? (I know this is an old chestnut, but a serious one, which I note has not been adjusted in the published draft 2016 Rules.)
- To what extent are we expected to continue to be “consistent” in using an old reporting style?
- When and how should proposed S98 fees be disclosed? What about MVL fixed fees?
- How far do we go in providing narrative? Does the bond premium really need to be explained? Are “a few lines of text” (per an RPB staff member’s online interview) really going to satisfy monitors (and be rules-compliant)?
- How do you explain why a proposed fixed or % fee is “expected to produce a fair and reasonable reflection of the work” to be undertaken?
- Are monitors expecting to see time costs breakdowns at all? What about charge-out rate sheets in progress reports?
- If they are not expecting them right now, is it safe to ditch the ability to produce time costs breakdowns or might we need them for the next inevitable iteration of SIP9?
- Do the Creditors’ Guides to Fees really work to “inform creditors and other interested parties of their rights under the insolvency legislation”?
- What are the RPBs expecting as regards providing “an indication of the likely return to creditors where it is practical to do so”?
Where are the answers?
The absence of “official” answers puts pressure on all of us to come up with our own. We’ve heard noises to the effect that some RPB monitors will go gentle on IPs as the SIP beds in. However, I think that’s a cop-out. An enormous amount of time and effort is expended in setting up systems and procedures and training staff in what is required. It’s not good enough to learn only at a monitoring visit how we’re expected to apply the SIP, leading to the need to invest further time and effort in changing things.
I think that the fact that the SIP hasn’t been in force for 3 months yet and already it has been the subject of an R3 webinar, an ICAEW webinar, countless blog posts and insolvency queries demonstrates just how we’re all struggling to get to grips with the issues dealt with so unsatisfactorily by the fees rules and the SIP.
Nevertheless, we have to manage as best we can. If you’re keen to absorb yet more information about SIP9, for the Compliance Alliance I shall be recording a webinar providing my thoughts on the questions above (including some thoughts from RPB staff who have responded to my queries) as well as taking a practical look at how to apply the SIP’s principles and standards. If you would like to sign up to the webinar (which will be available in a week’s time), please email firstname.lastname@example.org*.
SIP16: two for the price of one
In the same webinar, I’ll also be reviewing the practical application of the latest revision of SIP16 – a far less troublesome SIP, I think, but perhaps just as risky.
* Our webinars are available to all Compliance Alliance webinar subscribers (£250+VAT for firm-wide access to all our webinars for one year). If you would like to sign up, please email email@example.com.