Zara Naveed-Khan, trainee solicitor in our insolvency and restructuring team, looks at the recent updates to the Code of Ethics (the Code), which came into effect on 1 October 2025, and how they will impact the conduct of Insolvency Practitioners (IPs) across the country.
The Code has been introduced by the Joint Insolvency Committee, working alongside the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Scotland and the Insolvency Practitioners Association.
Professional conduct
Within the updated Code, an emphasis has been put on the way IPs should conduct themselves in a professional capacity:
‘A reasonable and informed third party would expect that an insolvency practitioner, in their professional life, treats others fairly, with respect and dignity and, for example, does not bully, harass, victimise, or unfairly discriminate against others.’
This replaces the previous wording requiring IPs to ‘conduct themselves with courtesy and consideration towards all with whom they come into contact when performing their work.’
The ‘reasonable and informed third party test’ is an established rule that applies to other aspects of the Code.
The inclusion of the term ‘professional life’ extends the obligations on IPs to include their conduct when they are attending social events as representatives of their employer and their interactions on social media sites.
If at any point an IP’s profession is stated or they are easily identifiable as such, then they will be held to the standards placed upon them within their ‘professional life’. The obligation operates outside normal working hours and is not restricted to conduct that occurs solely at the IP’s normal place of business.
The purpose of this revision is to ensure, so far as possible, that IPs do not discredit the profession through their actions.
Role and mindset
Spirit of the Code
IPs are not only required to adhere to the Code as it is written, but also with the spirit of the Code. It is important to note that adherence to the Code itself does not mean that the IP will not be in breach of their responsibility to act in the public interest.
Strength of character
It is also a known fact that IPs face high pressure situations during their day to day working lives. The Code has put an obligation on IPs to have the ‘strength of character’ not to compromise ethical principles when acting in such difficult situations. In all situations, an IP must act with integrity, which involves fair dealing and truthfulness.
Inquiring mind
Another recent addition to the updated Code is the obligation on IPs to have an ‘inquiring mind’. This is included in the Code as a prerequisite to applying the conceptual framework in each situation and involves:
- ‘Considering the source, relevance and sufficiency of information obtained, taking into account the nature, scope and outputs of the professional activity being undertaken.’
- ‘Being open and alert to a need for further investigation or other action.’
Bias
The updated Code also places a stronger emphasis on IPs to be aware of any bias that may occur when exercising their profession judgment, which include:
- ‘Anchoring bias, which is a tendency to use an initial piece of information as an anchor against which subsequent information is inadequately assessed.’
- ‘Automation bias, which is a tendency to favour output generated from automated systems, even when human reasoning or contradictory information raises questions as to whether such output is reliable or fit for purpose.’
- ‘Availability bias, which is a tendency to place more weight on events or experiences that immediately come to mind or are readily available than on those that are not.’
- ‘Confirmation bias, which is a tendency to place more weight on information that corroborates an existing belief than information that contradicts or casts doubt on that belief.’
- ‘Groupthink, which is a tendency for a group of individuals to discourage individual creativity and responsibility and as a result reach a decision without critical reasoning or consideration of alternatives.’
- ‘Overconfidence bias, which is a tendency to overestimate one’s own ability to make accurate assessments of risk or other judgements or decisions.’
- ‘Representation bias, which is a tendency to base an understanding on a pattern of experiences, events or beliefs that is assumed to be representative.’
- ‘Selective perception, which is a tendency for a person’s expectations to influence how the person views a particular matter or person.’
Organisational culture
An IPs obligation is not solely directed to their clients and the public’s interests. The revised Code emphasises that importance should also be given to the promotion and application of a positive internal organisational culture.
In their position, the updated Code puts a requirement on IPs to promote ethical behaviour and culture within their respective organisations.
Technology
The profession, like most, is experiencing the effects of rapid technological advancements. The updated Code provides guidance on the use of technology and the effects that it can have on the fundamental principles of confidentiality, professional competence and due care, dealing with complex circumstances and situations which might lead to activity that creates a Self Interest or Self Review Threat.
When dealing with confidential information, the Code now has incorporated a definition to include ‘any information, data or other material in whatever form or medium (including written, electronic, visual or oral) that is not publicly available.’
Conclusion
The updated Code imposes a greater responsibility on IPs for their actions, and a greater emphasis is put on their ethical behaviour towards both clients and colleagues.
With the rapid growth of technology and its uses, the new revisions come as no surprise. Could it be anticipated that with further advancements, more updates to the Code could be on the horizon.
Everyone within the insolvency profession should make themselves familiar with the impact of the new revisions on their ‘professional lives’ and how technology can and cannot be incorporated into their work.
If you have any queries about the updated Code or would like to discuss it further, please contact Zara Naveed-Khan or another member of our insolvency and restructuring team on 01772 258 321.