HL Deb 23 January 1992 vol 534 cc949-50

3.19 p.m.

Lord Morrisasked Her Majesty's Government:

Whether they will consider instituting a procedure to allow the taxation of liquidators' fees and costs, along the lines of taxation of costs in judicial proceedings.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)

My Lords, such a procedure, in essence, already exists. The Insolvency Act 1986 and the insolvency rules set out how liquidators' remuneration should be calculated and make provision for the setting of that remuneration by creditors, either through a liquidation committee or in general meetings. Creditors also have the power to make application to the court for an order to reduce remuneration which they consider excessive. Where creditors are not in a position to resolve the question of remuneration, it will be payable at a rate equivalent to that where an official receiver acts as liquidator unless the court directs otherwise.

Lord Morris

My Lords, I thank my noble friend for that very full answer. However, does not he find it somewhat disturbing that one major firm of accountants failed to demonstrate its much vaunted independence and courage by certifying the accounts of companies known to be questionable as showing a true and fair view and then for another assistant firm of accountants to step in and charge scandalously high fees, as pre-preferential creditors, thus jeopardising the possibility of the ordinary creditors getting anything from what was left of the companies?

Lord Reay

My Lords, fees are a matter for the creditors or the court and the Government are not in a position to comment on the costs of any particular liquidation.

Lord Bruce of Donington

My Lords, is the noble Lord aware that there is some public anxiety about this matter? Would he consider it advisable for either him, or his Ministers, to consult the appropriate professional accountancy bodies on this matter with a view to obtaining at any rate some reassurance from them?

Lord Reay

My Lords, as regards the professional bodies—and in particular the Institute of Chartered Accountants—we see their role as being primarily to regulate the conduct of their members generally and doubt whether they could be expected to devise a tariff for liquidators' charges. Charges can vary enormously from case to case, as we have seen, reflecting the complexity of the work involved in different liquidations.

Lord Williams of Elvel

My Lords, in view of the very high costs associated with liquidation and also with administration and receivership, do the Government believe that it is right that accountancy firms—who, after all, have their major business as auditing firms—should be also in this business? Would it not be right to separate out the auditing function so that accountancy firms can engage in auditing and other firms with this speciality can do liquidations and administrations?

Lord Reay

My Lords, I had something to say on this question in the debate yesterday. However, in this context I must say that the court may appoint a provisional liquidator at the moment when the court is presented with a petition for a winding-up order. It is then the court that fixes the remuneration of the provisional liquidator according to the insolvency rules.

Lord Williams of Elvel

My Lords, I am sorry to press the noble Lord, but I was not asking that particular question. I was asking him about the role of accountancy firms who also have departments which deal in liquidations and with administration and receivership. Is it right that one firm should cover those two activities?

Lord Reay

My Lords, the Government's view Is that auditors should not take such appointments.

Lord Williams of Elvel

My Lords, in that case will the Government persuade the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants in Scotland to introduce the necessary rules?

Lord Reay

My Lords, I shall be happy to look into that matter.