SIP 2 Consultation: What Changes for Insolvency Investigations

SIP 2 Consultation: What Changes for Insolvency Investigations

The rules that shape insolvency investigations are being reviewed for the first time in nearly a decade. On 14 May 2026 the Joint Insolvency Committee opened a consultation on proposed changes to Statement of Insolvency Practice 2 (SIP 2), the standard that governs how office holders investigate the affairs of insolvent companies and report on director conduct. The consultation runs for twelve weeks and closes on 6 August 2026, so insolvency practitioners and the professionals who support them have a short window left to respond.

What SIP 2 covers and why insolvency investigations matter

SIP 2 applies to administrations and insolvent liquidations. It sets out what an office holder should do when looking into a company’s affairs and how they should submit conduct reports on directors. The current version took effect on 6 April 2016 and has not been substantively updated since. Two principles sit at its heart. First, an office holder should carry out investigations that are proportionate to the circumstances of each case. Second, a conduct report should be based on information that comes to light in the ordinary course of the office holder’s enquiries, rather than from work done purely to satisfy a reporting duty. Conduct reports must be filed within three months of appointment through the Insolvency Service online portal.
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Insolvency investigations are a long-standing focus for the Insolvency Service and the recognised professional bodies. They serve the wider aims of the regime: protecting the public interest, maximising returns to creditors and maintaining confidence in how insolvencies are handled. Getting the standard right therefore matters well beyond the practitioners who apply it day to day.

The proposed changes to the insolvency investigations standard

The headline change is the introduction of “Analysis” into both the title and the body of SIP 2. The Joint Insolvency Committee has said this is deliberately worded in a non-specific and non-instructive way, so it signals an expectation rather than a rigid checklist. The intention is to make clear that gathering information is only part of the task. Office holders are expected to interrogate what they find, draw reasoned conclusions and record how they reached them.

Part of the reasoning is that the tools available for insolvency investigations have moved on since 2016. The committee has pointed to developments such as artificial intelligence and open banking, which are already changing how financial information can be gathered and examined. The revised standard is meant to stay relevant as those methods become more common, without tying practitioners to particular technologies.

What it means in practice for practitioners and their advisers

For insolvency practitioners, the direction of travel is towards showing the thinking behind an investigation, not just the fact that one took place. If “Analysis” is formally embedded in SIP 2, regulators reviewing case files are likely to look for evidence that information was tested and evaluated, and that conclusions on recoveries and on director conduct follow from it. Clear records of that reasoning will matter.

Proportionality remains central, which is a practical point for smaller and lower-asset cases. The standard is not asking for the same depth of enquiry in every matter. It is asking for the enquiry to fit the case, and for the analysis behind any decision, including a decision to take an investigation no further, to be defensible.

There is also a resourcing angle. Thorough analysis depends on good source material, and much of that material concerns assets, transactions and connected parties. Where an office holder needs to establish what a company or its directors owned, moved or concealed, external tracing and investigation work can provide the evidence base that supports a proportionate, well-reasoned conclusion. You can read more in our guidance for insolvency practitioners and our overview of asset tracing.

The consultation documents are available from the recognised professional bodies, including the ICAEW, ICAS and the Insolvency Practitioners Association. Responses are invited until 6 August 2026.

If your insolvency investigations need reliable asset tracing and evidence you can stand behind, fill in the form below to get in touch with the Tremark team.

Frequently Asked Questions

What is SIP 2?

SIP 2 is the Statement of Insolvency Practice that governs how office holders investigate the affairs of insolvent companies in administrations and insolvent liquidations, and how they report on director conduct.

When does the SIP 2 consultation close?

The Joint Insolvency Committee opened the consultation on 14 May 2026 and it closes on 6 August 2026, a twelve week window.

What is the main proposed change?

The main change is adding “Analysis” to the title and body of SIP 2, emphasising that office holders should evaluate the information they gather and record their reasoning, not simply collect it.