In an article published by Pratt's Journal of Bankruptcy Law, Insolvency and Restructuring partners Sonya Van de Graaff and Prav Reddy, senior associate Mark Johnson and associate Dominique Hodgson highlighted key takeaways from a webinar hosted by the United Kingdom's Financial Conduct Authority (FCA) to clarify its expectations of office holders, lawyers and consultants navigating insolvencies and restructurings of regulated firms.
"The overall message is that the FCA is dedicated to reducing harm from regulated firm failures and is focused on its statutory objectives of protecting consumers and the integrity of financial markets," according to the article, which explains that the FCA intends to increasingly assert its powers to mitigate such harm. The article further discusses the FCA's priorities and expectations, including clear communications to consumers as well as early and continued engagement with the regulatory body.
However, uncertainties remain following the webinar. The article explains that tension exists between the FCA's requirements and the legal requirements imposed on regulated firms and insolvency practitioners (IPs) appointed over them.
"Notably, the FCA is focused on consumer protection. In the case of redress claims, the regulator has made clear its commitment to ensuring a remedy for consumers who received unaffordable loans," according to the article. "This focus of the FCA translates to a need for firms and IPs to also prioritize consumer interests to satisfy the regulator, yet they are equally obliged at law to consider the interests of all creditors in the round in an insolvency situation. We expect this tension to continue pending statutory intervention."
"Financial Conduct Authority's Expectations for Regulated Firm Restructurings and Insolvencies," Pratt's Journal of Bankruptcy Law, February/March 2023
A version of this article first appeared as an advisory at katten.com, under the headline "Guidance for Insolvency Practitioners: Financial Conduct Authority's Update on Regulated Firm Restructurings and Insolvencies."