Let’s Talk Honestly: Are Insolvency Referrals Falling Below the Standard?

This is a copy of the email I sent the accountants on my database today, providing food for thought…

Over the past year, I’ve noticed two worrying trends in the insolvency space, trends that should concern anyone who wants to be seen as a true trusted adviser…

 

1. Accountants asking for referral fees – always quietly – for introducing struggling clients to an insolvency practitioner.

 

2. Accountants stepping away from clients as soon as financial difficulty arises – leaving the client unprepared, confused, and alone.

We’re all busy. I get that. But when a client is teetering on the edge, that’s exactly when they need their accountant most.

Two blogs from my “40 Years in Insolvency – Now Let’s Talk Honestly” series dig into these issues. If you advise business owners, I’d urge you to read them:

 

🔗 Who Pays When There Are No Assets in a CVL?

🔗 Ethics, Commissions and Insolvency

…when we know there are no assets to fund the process?

…and especially if a referral fee is quietly being expected or paid?

The regulators to insolvency practitioners make their position very clear: such payments to accountants are not allowed. Yet I’m frequently being asked to make them. And worse, I’m meeting directors who’ve arrived at my office completely in the dark. No background prep. No plan. No understanding of what’s ahead.

 

That’s not how a client of a trusted adviser should arrive. That’s not how you would want to be treated if the shoe were on the other foot.

And the solution is simple:

✅ Spend quarter of an hour with your client using VAi, my free insolvency copilot, to walk through their options.

✅ Help them understand what a CVL is, and what it’s not.  And, vitally, what the other options are, and are not.

✅ Educate them on the costs, duties, and consequences, so they go into any meeting informed, not overwhelmed.

I’ve even written a quick-start guide for accountants on how to use VAi:

🔗 Using VAi for the First Time – What to Expect

And there is a short video there showing how to use it.

This is all very basic stuff, but it matters, a lot. It doesn’t take long. And it shows your client that you’re in their corner even when times are tough.

 

So let me ask:

❓ If you want to be seen as the trusted adviser, shouldn’t that include the hard times too?

❓ Shouldn’t your clients be properly prepared before they step into an IP’s office?

❓ And if a fee is being paid by an IP, shouldn’t the client know about it, just like in the Close Brothers case now before the courts? Should you really be accepting an introductory fee if you’re giving no value?

These are not hypothetical questions. They’re happening now – and they go to the heart of the accountancy profession’s integrity.