FCA Guidance Consultation on insolvency practitioners

On 19 March 2024, the FCA published a consultation (GC24/1) containing proposed amendments to its "Guidance for insolvency practitioners (IPs) on how to approach regulated firms" (the Guidance). The Guidance, first published in 2021, is intended to assist IPs with ensuring regulated firms under their appointment continue to satisfy applicable on-going FCA requirements. The proposed changes are driven by wider legal and regulatory developments which we detail below on a "thematic" basis.

Proposed thematic changes:

1. Consumer Duty: to clarify that IPs are expected to conduct the affairs of the firm in a way that is compatible with the FCA's "Consumer Duty", when discharging their official duties. Key focus areas being, how IPs vis-à-vis regulated firms deal and communicate with retail clients and vulnerable customers.
2. FSCS compensation regarding payment and electronic money firms: aligning the Guidance with amendments to the scope of the Financial Services Compensation Scheme vis-à-vis the extension to eligible customers of payment institutions and an e-money institutions (EMIs).
3. Ipagoo decision: reflecting the Court of Appeal decision in Baker and another v Financial Conduct Authority (Re Ipagoo LLP) [2022] EWCA Civ 302. Specifically, the Guidance has been amended to remind IPs to top-up an EMI's "asset pool" where there is a shortfall in the safeguarded relevant funds.
4. Compromise arrangements: reflecting the FCA's July 2022 guidance on its approach to compromises (i.e. arrangements between a firm and its creditors and/or shareholders that can be used to reorganise a company or group structure, including restructuring debts). For example, reminding firms considering compromise arrangements that they (via IPs) should notify the FCA immediately and provide relevant information at an early stage in order for the FCA to determine any action it may need to take in respect of such arrangements.
5. Expansion of the Dormant Assets Scheme (DAS): aligning the Guidance with amendments to the extension of the scope of the DAS, a statutory scheme that seeks to reunite people with their assets. Changes to the Guidance centre on ensuring IPs liaise and coordinate with the relevant authorised reclaim fund where the firm is a member of a DAS.

The deadline for responses is 30 April 2024.