ACCOUNTANTS have warned that tight rules will be needed to regulate the new personal insolvency market.
New rules on who can become a personal insolvency practitioner are set to be issued soon.
Ahead of that, Association of Chartered Certified Accountants (ACCA) president Tom Murray said there was a need for lessons to be learnt from the unregulated corporate insolvency market.
Personal insolvency practitioners (Pips) are set to be approved and regulated by the new Insolvency Service to negotiate on behalf of distressed borrowers seeking deals from their banks.
Head of the new insolvency service, Lorcan O'Connor, is due to issue guidelines soon on the criteria to apply to the new Pips.
But Mr Murray, of the ACCA, said these new Pips would have to be vigorously vetted to ensure they had appropriate experience and qualifications.
"Based on the recent experience of the unregulated corporate insolvency market in Ireland, failure to vet individuals has the potential to have a detrimental impact on those considering entering bankruptcy in Ireland, their creditors and ultimately the Irish economy," Mr Murray said.
Thousands of mortgage brokers, accountants and lawyers are now expected to apply for approval as Pips.
But the majority of Pips are expected to come from the accountancy and legal professions.
A number of large accountancy firms have set up special operations to target business from the new insolvency regime.
Insolvency service boss Mr O'Connor has stated that those to be approved would need professional indemnity insurance and a software system capable of handling client payments.
Fees for the Pips are likely to be agreed between the bank and the Pip, and will probably be paid by the banks to the practitioner.
Along with upfront fees, there are likely to be monthly payments made by the bank to the Pip, if the borrowers keep to the repayment schedule.
The new Insolvency Service will replace the current inflexible bankruptcy system with court-backed deals between cash-strapped borrowers and banks, with some debt written off if a payment agreement is observed over a five- to seven-year period.
An information campaign on how the new service will operate is expected to be launched in the next few weeks, with the service expected to be operational by the summer.