Business Minister, Jo Swinson, has announced a new ruling in parliament today which will change the way insolvency fees are presented. Insolvency Practitioners will be required to give an upfront estimate of the costs involved, rather than on an hourly basis.
This will essentially provide a ‘cap’ on fees and will ensure clients and creditors know exactly how much the work costs as well as the level of work involved. In addition, once the fees have been agreed, they can only be changed if the IP and creditors agree to it.
Jo Swinson commented “Insolvency practitioners do important and specialist work realising the assets of failed companies for distribution to suppliers and others owed money. Initial fee estimates, which can only be changed by agreement, will strengthen the position of those owed money to ensure that fees are fair and reasonable”.
“Increased transparency is a sensible and practical way to strengthen the hands of those owed money in an insolvency and will give insolvency practitioners the opportunity to demonstrate how their services provide value for money”.
This is good news for clients, creditors and IPs as everyone will be fully aware of the costs, which in turn will put the focus back on working towards finding an effective solution.