On 12 May 2021, the FCA published Finalised Guidance 21/4: Guidance for insolvency practitioners on how to approach regulated firms (FG21/4).
The FCA has also published a Feedback Statement on its earlier guidance consultation on how insolvency practitioners should approach regulated firm failures. The Feedback Statement sets out the FCA’s response to the feedback received and the changes made to the guidance as a result. Overall, respondents supported the proposed guidance and the FCA has implemented it as consulted on, subject to minor changes.
The guidance in FG21/4 is structured 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 (During 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.
FG21/4 takes effect from 12 May 2021 and insolvency practitioners appointed over regulated firms should follow it to help them ensure firms meet their ongoing regulatory obligations following appointment.