New rules that will tackle excessive fees charged by insolvency practitioners have been laid out in parliament.
They mean that practitioners in England and Wales have to provide more information about their fees, including a summary of estimated costs, work that will be undertaken and, if an hourly rate is used, the estimated time for completion.
According to the government, such estimates will act as a fee cap and, once they are agreed, can only be changed with an agreement between the practitioner and those owed money.
The change has been made following independent review and consultation into fees after concerns were raised that the system allowed practitioners to charge excessive fees.
Business minister Jo Swinson said: “Increased transparency is a sensible and practical way to strengthen the hands of those owed money in an insolvency.
“It will give insolvency practitioners the opportunity to demonstrate how their services provide value for money.”
The new rules will come into effect this October.
Giles Frampton, president of insolvency trade body R3, added: “We are very pleased with the government’s practical proposals for updating the insolvency fees-setting process.
“An upfront estimate should work for both creditors and the insolvency profession, and will help improve trust and transparency in our insolvency regime.”
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