Proposed SIP 2 Changes: Analysis Moves to the Centre of Insolvency Reporting

Executive summary#

• The Joint Insolvency Committee has opened a consultation on revisions to SIP 2. The headline shift is that "analysis" would be made explicit alongside investigations.
• If adopted, SIP 2 would put more emphasis on showing how information was interrogated, what findings emerged, and how those findings affected creditor reporting, recovery decisions, conduct reporting, or regulator notifications.
• The consultation opened on 14 May 2026, runs for 12 weeks, and closes on 6 August 2026.
• The wider pattern is familiar: as insolvency administration becomes more efficient and easier to evidence, regulators and creditors tend to expect clearer records of professional judgement.

What is changing in emphasis#

The proposed title becomes "Investigations and analysis by office holders in administrations and insolvent liquidations and the submission of conduct reports by office holders." The revised principles also refer to investigations and analysis being proportionate to each case.

ICAS explains that the working group wanted to make explicit that SIP 2 can require interrogation of information or data, not merely collection. It has deliberately avoided a prescriptive definition of analysis because tools and working methods are changing quickly, including AI and open banking.

For insolvency teams, the practical question becomes: if this file is reviewed later, can someone follow the route from records obtained, to analysis performed, to conclusions reached?

A clearer trail from evidence to findings#

The proposed wording puts more pressure on the quality of the investigation file. Initial assessment would include whether further investigations and analysis are appropriate. The extent of that work should be determined by the case circumstances, including public interest, potential recoveries, likely funding, and costs.

That is not a blanket instruction to investigate every company in the same way. It is a demand for a structured, defensible decision trail. The file should explain why deeper analysis was warranted, why it was narrowed, or why no further work was feasible.

Reporting needs to be more transparent#

One proposed principle says office holders should clearly report on the steps taken during investigations and the resulting outcomes, while considering whether disclosure could affect recovery or enforcement action. That is the balance at the heart of SIP 2 reporting: say enough to explain the work, but not so much that privilege, confidentiality, litigation strategy, or recoveries are compromised.

The tracked draft also keeps a minimum reporting structure. The first progress report should cover the initial assessment, whether further investigations or action were considered, and the outcome. Later reports should cover investigations and actions concluded in the period, and those that remain ongoing.

Regulator reporting is also sharpened#

The proposed principles highlight that conduct reports and subsequent new information should be submitted in a timely manner. They also make clear that new information which would have been included in a conduct report, had it been available at the time, should be submitted promptly.

The draft also adds a reminder that possible offences can require reports to more than one relevant authority. For example, a Suspicious Activity Report does not remove the need to consider reporting to the Secretary of State or the Department for the Economy, where appropriate.

What practitioners should plan for now#

1. Map investigation decisions explicitly. Record why a line of enquiry was opened, narrowed, paused, escalated, or closed.
2. Distinguish collection from analysis. A file note that bank statements were obtained is weaker than a note explaining what transaction categories, counterparties, timings, and exceptions were tested.
3. Keep proportionality visible. Tie the scope of analysis back to estate economics, public interest, possible recoveries, funding, and litigation risk.
4. Make reporting structured. Progress reports should make the initial assessment, outcomes, ongoing work, funding issues, assignments, and recovery action easy to follow.
5. Capture regulator triggers early. New information should not sit in the case file without a clear decision on whether it changes conduct reporting or other reporting obligations.

Why bank and counterparty analysis becomes harder to ignore#

Much of the practical analysis in a SIP 2 review sits in the financial record. Connected-party flows, unusual withdrawals, creditor payment patterns, late-stage asset movements, and unexplained counterparties are difficult to assess properly from documents alone.

The consultation does not prescribe a tool or methodology. But if the final SIP retains this direction, it will become harder for firms to defend a process that gathers records without showing a structured breakdown of what those records revealed.

This also fits a wider regulatory pattern. The Insolvency Rules 2016 modernised case handling through electronic communication, websites and simplified reporting cycles; SIP 16 turned controversy around pre-pack sales into more detailed creditor disclosure and regulator monitoring; and AML guidance for insolvency practitioners has pushed firms toward risk assessments, documented controls, ongoing monitoring and evidence of decisions.

The lesson for SIP 2 is not simply that technology raises the bar by itself. It is that when routine administration becomes faster and easier to evidence, regulators and creditors are more likely to expect the professional judgement sitting behind the work to be clearer, more structured and more capable of review.