The IS has refused to remove a charge placed on Mr M’s property
20. This is the chief part of Mr M’s complaint. He says there was no legitimate right for the sale of the property to be prevented once the bankruptcy had been discharged in 2013. IS disputes this, and says the discharge of the bankruptcy does not change the status of the property.
21. Before we decide if we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not found any indications that something has gone wrong.
22. During our preliminary investigation, we reviewed the ‘Insolvency Act 1986’. This Government legislation is defined as ‘an Act to consolidate the enactments relating to company insolvency and winding up (including the winding up of companies that are not insolvent, and of unregistered companies); enactments relating to the insolvency and bankruptcy of individuals; and other enactments bearing on those two subject matters, including the functions and qualification of insolvency practitioners, the public administration of insolvency, the penalisation and redress of malpractice and wrongdoing, and the avoidance of certain transactions at an undervalue’.
The relevant sections in this instance are, as follows:
• Chapter II, ‘Protection of Bankrupt’s Estate and Investigations of His Affairs’. Section 283: “Definition of bankrupt’s estate. (1) Subject as follows, a bankrupt’s estate for the purposes of any of this Group of Parts comprises— (a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and (b) any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling with the preceding paragraph.”
• Chapter IV: ‘Acquisition, control and realisation of bankrupt’s estate’. Section 306: “Vesting of bankrupt’s estate in trustee. (1) The bankrupt’s estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee. (2) Where any property which is, or is to be, comprised in the bankrupt’s estate vests in the trustee (whether under this section or under any other provision of this Part), it shall so vest without any conveyance, assignment or transfer.”
23. This appears to make it clear that OR remained the legal owner of the property even after the bankruptcy was discharged, and that a sale cannot go ahead without their involvement and permission.
24. During our investigation, we obtained a copy of an NTB2 form which Mr M signed on 20 August 2012. An NTB2 form is a notice setting out the duties and responsibilities of an undischarged bankrupt, and it details relevant legislation regarding Mr M’s duties and responsibilities as part of the bankruptcy procedure.
25. The form states: “any assets which have not yet been realised, but which form part of your bankruptcy estate (the property which can be distributed among your creditors), are not returned to you but continue to belong to your trustee.”
26. This supports the decision that the property would not return to Mr M, even once the bankruptcy is discharged.
27. As a result, we have found no evidence of maladministration on the part of IS in this point of the complaint.
IS refused to escalate Mr M’s complaint
28. Before we decide if we should conduct a detailed investigation of a complaint, we ask the complainant what outcome(s) they are seeking. For each point of the complaint we must then consider, as well as whether there may be evidence the claimed failings occurred and resulted in the claimed impact, that the impact could then be put right by the desired outcome.
29. To put this aspect of the complaint, and our view on it, into proper context, it may be helpful if we explain more about the Insolvency Service’s complaint process and our approach to complaint handling in general.
30. We should make clear that, as we are not a regulator, we cannot determine how an organisation should be run on a day-to-day basis. This includes, but is not limited to, determining what its specific complaint procedure should look like. However, we do provide organisations with general guidance on this subject.
31. In 2009, we published our Principles of Good Complaint Handling. This was a document which set out our views on this subject. We explained that we expected (and still expect) organisations to understand what we mean by good complaint handling and to be clear about what we expect from organisations when dealing with complaints. Under these Principles (being customer focused) we said that organisations should ensure their complaints procedure is simple and clear, involving as few steps as possible. This was because we recognised that having too many complaint handling stages may unnecessarily complicate the process and deter complainants from pursuing their concerns.
32. More recently, we have published the UK Central Government Complaint Standards which set out how organisations providing government services should approach complaint handling. They have been co-designed with UK central government departments, other public bodies and advice and advocacy groups. Building on the good practice that already exists, including adherence to our Principles, they provide a consistent approach to complaint handling across government departments.
33. Alongside our Principles of Good Complaint Handling, we also published our Principles of Good Administration which aimed to provide a clear framework within which organisations should seek to work. One of these Principles was a desire for organisations to seek continuous improvement, part of which involves organisations reviewing their policies and procedures regularly to ensure they remain effective.
34. At the time of Mr M’s complaint, the IS operated a three-tier complaint procedure.
• Tier 1 - IS will send the complaint to a complaint handler within the team or business area where the issue occurred. That team (or business area) would send the person a formal reply once they have independently investigated the case. If the person remained unhappy with the reply, they could ask for their complaint to be escalated.
• Tier 2 – if the person escalated their complaint, it would reviewed by a senior member of staff not previously involved in the case. They would issue a formal reply once they had completed their review. If the person still remained unhappy, they could escalate their complaint to Tier 3.
• Tier 3 – at this stage, the IS’s Chief Executive would review the case to make sure it had been handled appropriately, proportionately, and fairly. Once the Chief Executive had completed their review, they would issue a formal reply, If the person remained unhappy, they could bring their concerns to our attention.
35. More recently, the IS has revised with this procedure and dispensed with the Tier 3 stage. Now, if someone remains unhappy following the Tier 2 response, they can bring their concerns to us.
36. Whilst, for the reason we have explained, we cannot say what the IS’s complaint procedure should specifically look like, we are satisfied that the changes it has made are in line with both our Principles for Good Complaint Handling (being customer focused) and our Principles of Good Administration (seeking continuous improvement).
37. During the complaints process with the IS, Mr M asked for the matter to be escalated to a tier 3 review (the final stages). However, as we have explained, IS had changed its internal complaints process during this time so that Tier 3 no longer exists. We can see this would likely have been frustrating for Mr M but we cannot say he was disadvantaged by this.
38. The evidence shows that, by exception, the IS offered him the choice of either still having the Chief Executive review or have the matter considered directly by us. Given the circumstances, this offer appears reasonable. Under our Principles of Good Complaint Handling – being customer focused – we expect organisations to respond flexibly to the circumstances of the case. This means considering how the organisation may need to adjust its normal approach to handling a complaint in the particular circumstances. We are satisfied that that the IS’ offer was in line with that expectation.
39. While this stage was offered and declined, Mr M has also complained that earlier delays and refusals to escalate, prior to the offer of a Tier 3 review, should be something PHSO should investigate. However, his only desired outcome in bringing the complaint is to remove the barrier to the sale of his property.
40. When deciding whether to investigate a complaint, we must consider whether it would be proportionate to do so. As part of this, we must consider whether an investigation is likely to bring about the outcome(s) the person is seeking from their complaint.
41. The impacts he has claimed would not have stemmed from this part of the complaints process, and even if that were not the case, we would not be able to recommend his desired outcome for this point of the complaint, as it would not resolve this. For that reason, we have decided to take no further action on this part of Mr M’s complaint.
It refused to provide a timeline for resolution
42. Mr M was unhappy that IS would not provide a timeline of its complaints process and confirm when he should expect a resolution. While this may be a matter we could investigate, similarly to the previous point, we could not recommend Mr M’s desired outcomes as a remedy to fix things, even if we did find evidence of failings and the claimed impact.
43. We should add that, in our experience, organisations can rarely offer a precise timescale for how long it will take to investigate a specific complaint. This is because it is likely to depend on several factors, such as the complexity of complaint and the availability of suitable resources. We understand this situation can be frustrating but is sometimes unavoidable. We know from the IS’s website that it aims to reply to 95% of complaints within 20 working days, by its own acknowledgment, it cannot guarantee this timescale in all cases. Nor, for the reasons we have explained, would we expect it to.
44. We were sorry to learn of the circumstances which led to Mr M’s approach to our office. We realise that the outcome of his approach is unlikely to be the one he was hoping for. We recognise his likely disappointment at this and hope we have clearly explained the reasons for our decision.