The dangers of using an unlicensed insolvency adviser have been highlighted by trade body, R3.
Reports suggest there is a growing number of unlicensed advisers targeting businesses and individuals, raising concerns that those seeking advice from them may be misled, receive incorrect guidance, or inadvertently end up breaking the law.
The lack of regulation and accountability of unlicensed advisers means they may provide inappropriate advice with far reaching ramifications.
Whilst unlicensed advisers can look at the circumstances of a person or company in financial difficulty, they are only able to recommend which licensed adviser should be used, often charging a considerable fee for the introduction.
Only a licensed insolvency adviser can actually take insolvency appointments, and manage a company insolvency process from start to finish.
This can make seeking advice from someone who is unlicensed a waste of time and money, as it will have been quicker and cheaper to have contacted a licensed practitioner in the first place.
Licensed practitioners are qualified, strictly regulated, and will have years of experience. Most will also offer a free initial consultation to discuss the details of a business or an individual’s circumstances.
It is not always the case that using a licensed adviser leads to bankruptcy or insolvency, as they can work with clients to determine the most appropriate option for them, whilst ensuring compliance with any statutory obligations.
Another issue to consider is that whilst someone using an unlicensed adviser has no recourse to anyone for their services, a licensed practitioner will be regulated.
For more information on unregulated advisers, see R3’s guidance documents for individuals and companies. These documents set out the misleading information provided by unregulated advisers, how to spot them, and why their claims can be flawed. They also contain useful information about how directors and individuals should approach a potential insolvency situation and how they can get practical, professional advice to assist them.
For further help and guidance please contact a member of Bishop Fleming Business Recovery and Insolvency team.
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