Directors Using Claims Management Companies (CMC)
This article is being issued to clarify the existing position that was set out previously in Chapter 17 Article 46 and to ensure compliance with the Claims Management Regulator (CMR) set out in Chapter 13 Article 94.
The Redundancy Payments Service (RPS) receives claims from directors where assistance in completing those claim forms has been provided by a CMC. In doing so, a percentage of the amount the director receives from the National Insurance Fund is claimed by the CMC as their fee.
In the vast majority of cases there are no issues concerning directors’ claims and they are paid accordingly. The RPS also takes the view that if anyone needs advice on completion of any claim form, they can get such help, without incurring any expense, from the RPS’s gov.uk pages, or from the insolvency practitioner.
Whilst there is no requirement to do so, where an insolvency practitioner is approached by a director for assistance in completing the claim form, the practitioner may refer such person to a CMC.
The office holder is responsible for validating the information provided by claimants in making any claim to the RPS (using forms RP14 and RP14A) with reference to the records of the company. To assist in this duty, an insolvency practitioner may choose to employ a CMC or other agents, or to retain payroll staff. Where an insolvency practitioner has used any agents for assistance in completing their validating information, the insolvency practitioner concerned remains responsible for the accuracy of the information provided. The insolvency practitioner should therefore take steps to ensure there are appropriate safeguards in place to confirm the accuracy and validity of all information provided.
If there is incomplete information or deficiencies in the records of the company, the insolvency practitioner should decide the level of claim that they are willing to validate, using their best judgement. In making this decision, the insolvency practitioner should consider all available means of obtaining relevant information. For example, by examining those records that do exist (including the claims made by the employees), by ensuring the directors comply with their duties to provide information or by employing or retaining specialist payroll or employment rights agents.
An insolvency practitioner should only engage CMCs, who fully comply with requirements of the CMR for assistance in performing their duties whilst also complying with section 2320 of the Code of Ethics.
An insolvency practitioner should also be able to evidence that they are satisfied that any CMC they engage complies with CMR requirements. A CMC should not act as both an agent of the insolvency practitioner and an agent of the claimant in the same case. This would present a conflict of interest within the statutory roles fulfilled by the insolvency practitioner.
The Insolvency Service will continue to report any potential CMR breaches or concerns over completed claim forms to the appropriate Recognised Professional Body for further consideration.
Enquiries regarding this article may be sent to: RPS.Stakeholder@insolvency.gov.uk.