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Are you ready for the future of insolvency regulation?

The UK government has consulted on a number of proposed reforms to the regulation of insolvency practitioners (IPs). These reforms are designed to modernise the regulatory framework, increase transparency, and bolster confidence in regulation.

It is expected that legislation will be introduced to implement the proposed reforms in due course, this will have a real-world impact on Insolvency Firms.

At Sigma 3 Digital we believe that there are a number of ways that data and technology can be used to support insolvency companies in light of the proposed updates to UK insolvency regulation.

Central to the changes are new rules requiring firms offering insolvency services to be regulated. This is a significant change, as currently only individual IPs are subject to regulation.

We believe that insolvency companies should focus their preparation for the new regime in three areas:

· Compliance

· Efficiency and productivity

· Decision-making



One of the key challenges for insolvency companies will be to ensure that they are compliant with the new regulatory requirements. Data and technology can be used to help insolvency companies to:

  • Identify and assess their current compliance practices

  • Identify any areas where they need to improve

  • Develop and implement new compliance policies and procedures

  • Monitor their compliance on an ongoing basis

Software solutions can help insolvency companies to manage their compliance obligations. These solutions can automate tasks such as risk assessments, policy and procedure management, and audit reporting.

Efficiency and productivity

Data and technology can also be used to improve the efficiency and productivity of insolvency companies. For example, data and technology can be used to:

  • Automate tasks such as data entry and document management

  • Streamline workflows

  • Improve communication and collaboration between team members

Insolvency companies can use data analytics to analyse financial data from businesses in distress. This information can be used to identify trends and patterns, assess the financial health of a business, and develop recovery plans. Having an audited, traceable system in place is not only more efficient but also helps demonstrate regulatory compliance.


Data and technology can also help insolvency companies to make better decisions. For example, data and technology can be used to:

  • Analyse financial data to identify trends and patterns

  • Develop and use predictive models to forecast future outcomes

  • Assess different options and make informed decisions

Artificial intelligence (AI) can be used to develop predictive models that can forecast the likelihood of a business becoming insolvent. This information can be used by insolvency companies to identify businesses at risk and to intervene early to prevent insolvency.

Data and technology applied to decision-making helps insolvency firms to demonstrate that the advice given and actions they take are in compliance with regulatory frameworks.


It Only Works if People Want to Use It!

Data and technology can play a significant role in supporting insolvency companies in light of the proposed updates to UK insolvency regulation.

However, simply building new technologies isn’t enough, often we see that cultural change is needed to ensure that any new developments are welcome and widely adopted by teams. Although each of our clients are at different stages, the following can be important:

  • Developing a data strategy: Firms should develop a data strategy that outlines their goals for using data and technology. This strategy should be aligned with the company's overall business strategy and should identify the specific data and technologies that will be needed to achieve those goals.

  • Investing in data infrastructure: Success may require investment in the necessary data infrastructure to support the data strategy. This infrastructure may include data storage, data processing, and data analytics tools.

  • Upskilling the workforce: Companies may need to upskill their workforce on how to use data and technology effectively. This training should cover topics such as data analysis, data visualisation, and data-led decision-making.

By taking these steps, insolvency companies can ensure that they are well-positioned to meet the challenges and opportunities of the new regulatory environment.

The proposed reforms to the regulation of insolvency practitioners are a significant change, but they represent an opportunity for insolvency companies to improve their compliance, efficiency, productivity, and decision making.

Sigma 3 Digital is well-placed to help insolvency companies to navigate the evolving regulatory landscape and to capitalise on the opportunities that it presents. Book a free discovery call today to find out more.

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