Disciplinary

Regulatory notices

MICHAEL J M REID CA

In terms of Regulation 5.33 of the ICAS Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £11,500 to the Insolvency Practitioner Michael Reid in respect of the following three issues:

1. A failure to maintain adequate and compliant time records as required by Statement of Insolvency Practice 9;

2. A failure to review or verify employee claims against payroll or other appropriate documentation, and to notify the Redundancy Payments Service that claims were not verified; and

3. A failure to document investigation work to support conclusions reached, including investigations into the validity and potential misuse of a Bounce Bank Loan.

In calculating the level of penalty, the Committee consulted the sanctions guidance which is shared by the Insolvency RBSs and reached the following conclusions:

Issue 1: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “less serious”, on the basis that there was no evidence of any prejudice to creditors or other third parties as a result of the failure to maintain adequate time-recording records. The Committee therefore determined that the starting point sanction of £1,500 should be applied.

Issue 2: The Committee categorised this as a “Failure to comply with the fundamental principle of professional competence and due care” as noted in part 3 of table 2 in the sanctions guidance. Verification of employee claims is an important issue given the potential for fraudulent activity and the Committee would have expected the IP to be aware of his responsibilities in this area. The Committee assessed the level of seriousness of the conduct as “serious” and determined that the starting point sanction of £5,000 should be applied.

Issue 3: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “serious”, noting that there was very little evidence of investigation work carried out in the cases which were reviewed. The Committee would have expected the investigation work to be more comprehensive and to have included a review of bank statements and other relevant records. This work should also have been documented. The Committee therefore determined that the starting point sanction of £5,000 should be applied.

LAURENCE GERALD FACTOR CA

In terms of Regulation 5.33 of the ICAS Insolvency Regulations, notice is hereby given that the ICAS Authorisation Committee has applied a regulatory penalty of £7,500 to the Insolvency Practitioner Laurence Factor in respect of the following two issues:

1. Failure to hold estate funds in individual estate accounts, as required by Statement of Insolvency Practice 11; and

2. Failure to investigate the validity and potential misuse of a Bounce Back Loan.

In calculating the level of penalty, the Committee consulted the Common sanctions guidance which is shared by the Insolvency RBSs, and reached the following conclusions:

Issue 1: The Committee categorised this as a “Failure to comply with the principles of a SIP, the Insolvency Act and rules and regulations thereunder” as noted in part 9 of table 1 in the sanctions guidance. The Committee assessed the level of seriousness of the conduct as “serious”, as it was more than an inadvertent mistake. The starting point penalty for an offence at this level is £5,000. In mitigation, the Committee noted that there was no evidence of any loss of monies to the insolvent estates and/or any third parties as a result of the estate funds not being held in separate estate accounts. The Committee therefore concluded that an appropriate penalty was £2,500.

Issue 2: The Committee categorised this as a “Failure to comply with the fundamental principle of professional competence and due care” as noted in part 3 of table 2 in the sanctions guidance. The starting point penalty for an offence at this level is £5,000. The Committee did not consider that there were any aggravating or mitigating factors which would justify a departure from the starting point. The appropriate penalty was therefore decided to be £5,000.

LATE PAYMENT

On 13 August 2024 the Authorisation Committee determined that an ICAS firm was liable to pay a regulatory penalty of £250 in respect of its failure to pay its AML licence fees timeously, in breach of Regulation 4.2 of the AML Regulations. On this occasion the Committee agreed not to identify the firm so charged.