A number of issues were raised in this morning’s article “Banks accused of being too cosy with receivers” The Time, Business, 5 March 2015
The apparent astonishment expressed by Adrian Bailey MP regarding “unregulated receivers” working in banks might seem slightly misconceived. However, similar views held by the public at large are damaging to the licensed insolvency profession.
It is easy to understand how perceived conflicts of interest arise when firms of property surveyors or accountants second their staff to banks and, at the same time, benefit from receivership, administration or agency instructions from those banks. In much the same way, there are perceived conflicts of interest when firms of property surveyors advise banks on enforcement strategies, then accept appointments as receiver before instructing their own valuation, planning, investment, asset and property management teams to execute strategy. Talk of safeguards and Chinese walls are likely to fall on deaf ears given the degree of public and political scepticism surrounding banks.
A simple solution to engender trust when a bank enforces security over a distressed property loan is to use the services of a licensed insolvency practitioner, either as receiver or administrator – a message that Moorfields Corporate Recovery has consistently promoted.
Not only are we subject to a much more robust regime of external scrutiny, regulation and compliance monitoring - overseen by professional bodies such as the Institute of Chartered Accountants in England and Wales - but our choice of property agent and adviser is not fettered by intra-firm loyalties.
Were this to happen as a matter of routine, property agents would still continue to benefit from instructions as professional adviser to insolvency practitioners. At the same time, the public, business and political community would have less cause to form unhelpful perceptions about conflicting interests.
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