The business of personal insolvency

It is well understood that developing economies follow a typical pattern of three phases – they start as agricultural, then move to a manufacturing phase before finally developing a financial economy. One of the outcomes of the bubble in Ireland was the parallel growth of a massive financial services industry. Now that the “real” economy has gone into reverse, so the financial economy is contracting at an even greater rate.

The redundancies in the banking sector are well under way but there is also a massive group of financial advisors and intermediaries who have been desperately trying to reinvent themselves since the crisis struck – for example the country’s mortgage brokers who have seen their business contract by as much as 95 per cent from the height of the housing boom.

Now salvation of a sort may be around the corner in the form of the new personal insolvency regime due to come into operation in the second quarter of the year.

The Insolvency Bill has been wending its way through the Oireachtas and close followers of its progress will have noted a number of significant changes at the Committee Stage in Seanad Eireann at the start of December.

For those who would wish to become a personal insolvency practitioner (PIP), the Minister for Justice, Alan Shatter, under whose remit the Insolvency Bill falls, had some encouraging words for the various financial intermediary lobby groups who have been pressing for their members to get a piece of the personal insolvency action.

“I wish to make clear that we will not be imposing any particular restrictions as the type of profession of persons who will be licensed to perform this function,” said Deputy Shatter. “The practice in other countries is that such insolvency practitioners tend to be accountants or lawyers but can also be other professionals in the broad financial services sectors. Many of these will already be regulated as appropriate by the Central Bank for the provision of other financial services. This is the approach I intend to take. Suitable persons meeting the formal fitness to practise and competence criteria who have indemnity insurance and meet the other requirements of the legislation will be able to apply for registration on an individual, not corporate, basis.”

So far, so good for the legion of underemployed financial intermediaries. But further examination of the changes to the legislation leaves any observer in no doubt that the increased vigilance and supervisory requirements placed on the financial intermediary sector by the Financial Regulator in recent years will be the norm in this new business stream.

The amendments to the Bill are replete with detailed requirements for prospective PIPs (who are made totally beholden to the newly created Insolvency Service), covering:

•    Procedures governing the authorisation of persons to carry on practice as PIPs, standards to be observed by them, qualifications and requirements as to competence, and information they must provide to the Insolvency Service.

•    Circumstances and purposes for which a personal insolvency practitioner may charge fees or costs or seek to recover outlays.

•    The Insolvency Service to establish and maintain a register of personal insolvency practitioners that will be published on the website of the Insolvency Service for the benefit of the public.

•    Specified evidence and documents to accompany an application for an authorisation to carry on practice as a PIP (as well as the prescribed fee).

•    Applicants to provide evidence as to their competence, including details of education, training and experience. (In particular, applicants must provide evidence of knowledge of relevant Irish insolvency legislation, which will include knowledge of the Bill.)

•    The Insolvency Service to make regulations regarding bank accounts which may be opened by personal insolvency practitioners for the keeping of moneys received from debtors; the rights, duties and responsibilities of a personal insolvency practitioner in respect of moneys received from debtors; the accounting records which must be maintained and also verification and enforcement of compliance with regulations.

Critically, the amendments address the financial and system controls necessary to practice as a PIP. “Applicants must furnish a certificate from an accountant certifying that proper financial systems and controls are or will be in place for the protection of moneys received from debtors. They must also provide evidence of their professional indemnity insurance. The insolvency service will make such inquiries and examinations as necessary with regard to an applicant's character, competence and financial position.”

So while there are no formal restrictions on applicants in terms of professional qualifications, it appears the bar will effectively be set high for prospective PIPs in terms of competence, training and infrastructure/systems.

This is as it should be. Anyone with even a passing acquaintance of the practices of financial brokers of old will testify to the prevalence of “back-of-the-envelope” workings and erratic case management and filing.

As we have previously highlighted in the pages of StubbsGazette, while there is unquestionably a business opportunity to service a grouping of perhaps up to 15,000 cases in its first year of operation, the effort involved in delivering a quality service in relation to the level of fees likely to be commanded by PIPs requires systems and procedural efficiencies of the highest order. Any platform to handle the three types of insolvency scheme must be user-friendly and intuitive on the debtor side while offering the PIP the kind of processing efficiency and management information necessary to take these cases through the five or six years of their intended lifespan. That is to say nothing of the detailed requirements of the Insolvency Service (when these are made public) together with the payments and reporting requirements of creditors affected by individual schemes.

StubbsGazette will be at the centre of the new personal insolvency regime. We will be offering practitioners a bespoke state-of-art case management and payments platform to guarantee compliance with Insolvency Service requirements coupled with unmatched functionality. For those wishing to practice under the new regime we will be commencing a series of industry briefings in the New Year. Contact James Treacy at

Top Judgments Registered


Pure Fitout Associated Limited
Address: R/o Unit 1 Building 1, Central Park, Mallusk, Newtownabbey Co Antrim
Amount: €257,165.09


Room to Improve Building Services Limited
Address: R/o 29 Molesworth Close, Knocksedan, Swords, Co Dublin
Amount: €49,968.16


William Gray
Address: Feighcullen Farm, Feighcullen, Rathangan, Co Kildare
Amount: €29,535.44


Rory McAtavie
Address: 19 Wylies Hill, Ballybay, Co Monaghan
Amount: €28,138.31

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