As you are all aware a revised SIP 9 has just been released with an effective implementation date of 1 November 2011. We will be updating our reviewing checklists over the next few weeks and may well have further thoughts and guidance on its implementation, but our initial thoughts on the main changes, apart from the switch to a principles based approach, are:
• it only applies to England and Wales. (We have removed the incorrect reference to it applying to Scotland as well that was included in the initial Blog post. Despite our understanding that all future SIPs would apply equally to both England and Wales and Scotland this did not happen to SIP 9. There is a story behind that apparently, so watch this space ....);
• a copy of the SIP 9 Guidance Notes must be made available to creditors whenever a report is sent to them after the basis of remuneration has been approved – previously it was only necessary to make a copy available when seeking approval, although it was good practice to do so with all subsequent reports;
• placing an emphasis on transparency, disclosure and approval of payments to associates of the office holder or practice in connection with the appointment and needing to ensure that where services are provided by an associate of the office holder that the best value and service is being provided;
• placing an emphasis on transparency, disclosure and approval of payments to those with whom office holders have a professional or personal relationship where that could give rise to a conflict of interest, or where there is such a perception ;
• placing an emphasis on transparency and disclosure where office holders have a professional or personal relationship with those responsible for approving their remuneration and expense, where that could give rise to a conflict of interest, or where there is such a perception;
• a requirement to disclose the minimum time units used where remuneration is to be fixed on a time and rate basis and the expectation that these are 6 minute units is now specified;
• details of work this has, or is, to be contracted out in reports to creditors in all cases, which previously only applied where remuneration was to fixed on a % basis;
• emphasis placed on providing details of what has been achieved and how it was achieved in the report sent to creditors when seeking to fix the basis of remuneration;
• needing to disclose all changes in charge out rates when reporting to creditors, not just material changes ;
• mileage is categorised as a category 2 disbursement clearing up the uncertainty caused by an inconsistent approach between the regulators;
• approval of category 2 disbursements in one insolvency procedure can be relied upon in successive insolvency procedures, or where an office holder is replaced; and
• introducing a requirement for an office holder to provide a successor office holder with information.
The revised SIP will apply to all cases commenced on or after 1 November 2011, although IPs are encouraged to apply it to all cases. To ensure that you are only operating one system then we would suggest applying this version of SIP 9 to all of your cases, but do not forget to draw the attention of creditors to the correct version of the SIP 9 Guidance Notes depending on the age of the case, i.e. the April 2007 or the April 2010 versions.
