The Government has set out new rules requiring insolvency practitioners to provide creditors with an upfront fee estimate when charging on a time costs basis. The estimate would also act as a provisional cap because fees cannot be increased beyond that estimate without agreement from the creditors.
The rule change comes after an independent review found that current controls were more effective when the decision-making power was in the hands of secured creditors rather than unsecured creditors; resulting in fees being ‘considerably higher’ where there was no secured creditor involved. The review also found that the average charge out rate among insolvency practitioners is £375 per hour; which is considerably higher than the rates at EWS.
The changes will be implemented in October 2015 and the hope is to increase transparency and control for creditors by giving them more knowledge when agreeing with fees; whilst also giving insolvency practitioners the opportunity to demonstrate to creditors what they do and the value they deliver.
If you would like advice regarding the fees charged in an insolvency procedure or would like information on our competitive rates, please contact us for a confidential initial consultation, for which there is no charge. Contact us.