On 7 December 2020, the FCA published Guidance Consultation 20/5: Guidance for insolvency practitioners on how to approach regulated firms (GC20/5).
In GC20/5 the FCA sets out proposed guidance on how an insolvency practitioner should ensure regulated firms meet their ongoing financial services regulatory obligations following appointment. The FCA supervises regulated firms, including those in insolvency proceedings, while they continue to be authorised or registered. The FCA is not the regulatory authority for insolvency practitioners and insolvency practitioners generally act as officers of the court. The FCA has therefore engaged with the recognised professional bodies, who licence and regulate insolvency practitioners, on the proposed guidance. The proposed guidance is aimed at insolvency practitioners appointed over firms solely authorised or registered by the FCA. It may also be relevant for insolvency practitioners appointed over firms that are dual regulated by the FCA and PRA2
The layout of GC20/5 is as follows:
- Chapter 1 (Introduction) explains the scope of the guidance and the FCA’s role in regulated firm failures.
- Chapter 2 (Pre-insolvency) outlines considerations for insolvency practitioners before a regulated firm’s entry into an insolvency procedure, such as obtaining consent for out of court administration appointments and sharing court documentation with the FCA.
- Chapter 3 (Entering insolvency) explains the FCA’s expectations on insolvency practitioners at the point of a regulated firm’s entry into an insolvency procedure and shortly thereafter, such as communications with clients and creditors.
- Chapter 4 (Post insolvency) explains the FCA’s expectations on insolvency practitioners during an insolvency procedure, such as treatment of client assets and treating customers fairly.
- Chapter 5 (Restructuring procedures) explains the FCA’s expectations when a regulated firm enters into a company voluntary arrangement, scheme of arrangement or restructuring plan.
- Chapter 6 (Checklist) summarises the key steps from the guidance that an insolvency practitioner will need to consider when appointed over a regulated firm.
The deadline for comments on GC20/5 is 18 January 2021.