Updated Insolvency Code of Ethics: what do insolvency practitioners need to know?

The Joint Insolvency Committee, in collaboration with the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS) and the Insolvency Practitioners Association (IPA), has approved and issued a revised Insolvency Code of Ethics. The updated Code took effect from 1 October 2025.
 

It is no doubt a coincidence the changes to the Code take effect before the biggest insolvency shindig of the year this Friday, but IPs should be aware the changes to the Code mean they will be very much on duty as far as their Regulators are concerned at the R3 Business Lunch.

The revisions bring the Insolvency Code into line with the 2024 International Ethics Standards Board of Accountants Code, already adopted by ICAEW from 1 July 2025 and ICAS from 1 January 2025.

The Insolvency Code of Ethics applies to all insolvency practitioners (IPs), irrespective of their regulatory authorising body.  It applies to all professional work relating to an insolvency appointment and to any work that may lead to such an appointment.

The Code of Ethics
 

The updates to the Code reflect broader regulatory trends across the UK. Increasingly, regulators expect their members not only to meet technical standards but also to uphold professional ethics and contribute to a positive workplace culture.

The SRA was among the first regulators to make this move, initially focusing on sexual harassment in the workplace, as a response to the global #MeToo movement. That focus has since evolved to address overall workplace culture and the expectation that professionals treat others fairly and respectfully. Other regulators have begun implementing such changes; the FCA has formalised non-financial misconduct within its rules and recently confirmed that serious bullying and harassment qualify as misconduct, while the ICAEW has expanded its definition of professional behaviour to include bullying, harassment and discrimination.

The Insolvency Code of Ethics is now moving in the same direction. By strengthening expectations for IPs' professional conduct, the updated Code underlines that IPs are accountable not just for technical competence but for fostering environments that support professionalism and public confidence.

Overview of the revisions
 

The changes focus on three key areas:

• professional behaviour;
• role and mindset; and
• technology.

Professional behaviour

The Code now provides greater clarity on how IPs are expected to behave in their professional lives. The key takeaway points are:

• conduct in the IP’s professional life will be assessed by what a “reasonable and informed third party” would conclude brings discredit to the profession;
• revised wording in paragraph 2105.1 A2 makes clear that IPs must treat others fairly, with respect and dignity, and must not bully, harass, victimise, or unfairly discriminate against others;
• importantly, the expectations extend beyond client-facing work. Any situation where the IP represents their employer or the profession falls within the scope of “professional life;” and
• while private conduct generally falls outside the Code’s scope, serious misconduct (e.g. criminal convictions) can still bring discredit to the profession and therefore breach the Code. The “reasonable and informed third party” test will be applied to private conduct to determine whether it is captured by the Code.

These changes require IPs to consider not only how they act in the office, but also how their wider conduct may be perceived in light of their professional role. There is a clear expectation that IPs treat colleagues, clients, and others they interact with in a fair, respectful and ethical way. Conduct within the workplace, such as how IPs engage with colleagues, will be subject to closer scrutiny.

Importantly, these obligations are not confined to office hours. Behaviour outside of day-to-day professional life can also fall within the scope of regulation. Representing an employer at a conference, posting on social media platforms as an IP, or indeed conduct at a work-organised Christmas party are all professional settings which may fall under these updates. IPs therefore must ensure that they treat others fairly, with respect and dignity, in all professional settings.

Role and mindset

The revised Code also places stronger emphasis on the public interest role of IPs and the behavioural characteristics expected of them. Key changes include:

• clearer links between compliance with the Code and acting in the public interest, including recognition that compliance requires adherence to both the letter and the spirit of the Code;
• a new requirement to exercise an inquiring mind when applying the conceptual framework, considering the sufficiency and reliability of information and being open to further investigation (paras. 2111.5 A1–A3);
• reinforcement of integrity, stressing the importance of having the strength of character to act appropriately, even in difficult situations;
• enhanced focus on objectivity, professional competence, due care, and professional behaviour, including addressing the influence of bias (paras. 2117.3 A1–A3 list eight examples of potential bias); and
• recognition of the role of a positive organisational culture in promoting ethical behaviour, with explicit expectations that IPs contribute to embedding such culture (paras. 2117.4 A1–A3).

For IPs, this means the focus is no longer solely on avoiding misconduct. Instead, they must take positive steps to ensure their work is carried out in a way that actively promotes trust in the insolvency profession. That involves exercising judgment with care, being alert to ethical risks, and modelling behaviours that reinforce confidence, both within their own teams and in the eyes of the public.

Technology

The Code has been updated to acknowledge the rapid pace of digitisation and developments such as artificial intelligence (AI). IPs are already turning to AI tools for efficiency, such as for managing large volumes of data or drafting documents. However, while the advantages are clear, AI is not fail-safe. It can produce inaccurate outputs, “hallucinate” information, and its use carries risks with any confidential information inputted.

The Code’s new provisions on the use of technology include:

• a duty to assess whether technology outputs are reliable and appropriate before relying on them, taking into account factors such as;
• the purpose and nature of the task being performed;
• the intended use and extent of reliance;
• whether the practitioner (or an expert they can access) can understand, use and explain the technology;
• whether the tool has been properly tested and evaluated;
• prior experience with the technology and whether its use is generally accepted;
• the firm’s oversight of the technology’s design, development, and operation;
• the adequacy of controls around access and use; and
• the appropriateness of the inputs, data, and related decisions.
• a revised definition of “confidential information” is now extended to cover “any information, data or other material in whatever form or medium (including written, electronic, visual or oral) that is not publicly available.” This means that the duties practitioners had to protect confidential information are now extended to a much wider remit, highlighting the need for careful handling of information in the use of technological tools.

Across the regulatory spectrum, there has been a drive to provide greater clarity on professionals’ responsibilities when using AI. The joint insolvency regulators have begun to address these issues, seeking to ensure that the use of AI is subject to the same high standards of oversight, confidentiality, and professional responsibility as more traditional tools and processes.

Next steps for insolvency practitioners
 

From 1 October 2025, IPs should:

• familiarise themselves with the expanded definition of “professional life” and ensure their conduct, in person and online, meets the new standard;
• review internal policies and training to address new requirements around bias, organisational culture, and acting with an inquiring mind;
• assess use of technology in their practice, ensuring robust systems for confidentiality, reliability, and explainability of outputs; and
• prepare for heightened scrutiny of behaviour that could discredit the profession, including outside core client work.

The updated Codes can be found here: ICAEW Insolvency Code of Ethics; ICAS Insolvency Code of Ethics; IPA Insolvency Code of Ethics.

Final thoughts
 

The revised Code reflects the broader regulatory trend towards greater accountability, promoting an ethical culture, and responsible use of technology across professional services. Conduct that may once have been tolerated, such as bullying or harassment, is now treated as a regulatory matter rather than purely an employment issue. The updated Code makes clear that IPs are held to a higher standard and that inappropriate behaviour can and should be reported. The revisions also recognise that IPs must use technology responsibly and maintain confidentiality and client care when relying on technology.

The updates to the Insolvency Code of Ethics show how the profession is responding to changing expectations and emerging risks. IPs must ensure they act carefully in all aspects of their professional lives to meet the new standards.

If you have any questions or require advice concerning issues relating to the regulatory requirements for insolvency practitioners, please email a member of our team in confidence.

About the authors

Jenny is a Legal Director in the Regulatory team. She specialises in actuarial, accountancy and financial services regulation, and is experienced in advising regulated individuals and firms as well as acting on behalf of professional regulatory bodies.

Zoe is an Associate in the Regulatory team. Zoe works with the Zacchaeus 200 Trust charity, acting for clients to appeal disability benefit decisions. She also volunteers for Amicus, Queen Mary Legal Advice Clinic and the Schools Consent Project.

Nick joined Kingsley Napley in 2023 and is a Partner in the Restructuring & Insolvency practice. He has specialised in insolvency work since 2001 and is primarily office holder focused.