No — insolvency practitioners cannot pay referral fees for an introduction that leads to their own appointment as office-holder; R340.4 of the Insolvency Code of Ethics specifically bars paying a third party for that introduction, because it creates a self-interest threat to the practitioner's objectivity. What insolvency practitioners (IPs) can do is pay properly for genuine services, marketing, or lead-generation work — provided the payment is not, in substance, a fee for the introduction to the appointment itself.
This distinction trips up a lot of firms, especially when introducer relationships are informal or when commission is routed through a solicitor or accountant. This guide sets out what R340.4 actually prohibits, why the rule exists, and how a firm can build a compliant referral pipeline without falling foul of its regulatory professional body (RPB).
Can insolvency practitioners pay referral fees under R340.4?
The Insolvency Code of Ethics applies to all insolvency practitioners authorised in the UK under the statutory framework set out in the Insolvency Act 1986, regardless of which recognised professional body (RPB) licenses them. R340.4 sits within the section dealing with threats to the fundamental principle of objectivity, and its effect is straightforward: an IP must not make, or agree to make, a payment to a third party in exchange for that party introducing work which results in the IP's own appointment.
The rule is not really about money changing hands. It is about the reason money changes hands. A payment made specifically because an introducer steered an appointment to a particular IP is prohibited, however it is labelled — "referral fee", "introduction fee", "finder's fee" or "commission on appointment".
Crucially, the Code applies the substance-over-form test consistently used across UK professional ethics: RPBs and the courts will look past the invoice description to what the payment was genuinely for.
Why paying for an insolvency appointment introduction creates a self-interest threat
Insolvency appointments are meant to be won on merit — expertise, capacity, independence and fit for the case. If an IP pays for the introduction itself, that creates a self-interest threat: a financial incentive that could influence how the IP handles the case once appointed.
The concern is not hypothetical. An office-holder who owes an introducer a cut of the appointment may be tempted to:
- Favour the introducer's future referrals over the interests of creditors.
- Accept unsuitable or conflicted cases to keep the introducer relationship alive.
- Under-report or shape reporting in ways that keep the introducer commercially comfortable.
None of that has to actually happen for the rule to bite. The Code is a bright-line prohibition precisely because self-interest threats are hard to evidence after the fact — better to remove the incentive at source than to rely on the IP's judgement in the moment.
The difference between paying for an appointment and paying for a service or lead
This is where most firms get into difficulty, because paying for insolvency appointments is banned, but paying for legitimate commercial services is not. The dividing line is what the money is actually buying.
What is generally permitted
- Marketing and advertising spend — paying a directory, publication or digital platform a fixed fee for visibility, regardless of whether it leads to an appointment.
- Genuine professional services — paying an accountant or solicitor their normal fee for work they actually did (accountancy, legal advice), even if that relationship happens to also generate introductions.
- Fixed-fee introducer arrangements that are not tied to appointment outcome — for example, a flat fee per qualifying enquiry passed on, disclosed and documented, rather than a percentage of fees earned once appointed.
What is generally prohibited
- A percentage or share of the IP's fees paid to whoever introduced the case.
- A payment contingent on the introduction actually converting into an appointment.
- Any arrangement dressed up as a "consultancy" or "marketing" fee that, in substance, only pays out when a case lands.
The test each firm should apply to any insolvency referral fee rules question is simple: would this payment exist, in this amount, if the introduction never became an appointment? If the answer is no, it is very likely to fall foul of R340.4.
Where routing money through a third party goes wrong
Some firms try to sidestep the rule by paying commission to a solicitor, accountant or other professional connected to the referral, rather than paying the individual who made the introduction directly. This does not solve the problem — it simply adds a layer that RPBs and disciplinary panels are well used to looking through.
If a solicitor receives a payment from an IP that is calculated as a share of the insolvency fees, and that payment depends on the client's case proceeding to an IP appointment, the substance is unchanged: it is still a payment for the appointment introduction. Structuring it as a "referral arrangement" between two professionals does not convert a prohibited appointment fee into a permitted commercial fee.
This is a live compliance risk for firms that rely on solicitor introducers, because solicitors have their own regulatory constraints (the SRA's rules on referral fees and client best interests) that can be breached in parallel. Practitioners authorised under the route set out in gov.uk's guidance on becoming an insolvency practitioner are expected to understand and apply the Code as a condition of their licence, not treat it as optional. Two regulators, two sets of exposure, from the same flawed arrangement.
Compliant ways to build referral flow without breaching the Code
Firms do not need to choose between growth and compliance. There are well-established, RPB-tolerated ways to build a referral pipeline:
- Pay for marketing, not appointments. Fixed advertising, sponsorship and directory listing fees are legitimate business costs and are not linked to appointment outcome.
- Pay lead-generation fees per qualifying enquiry, not per appointment. A fee for passing on a genuine, qualifying enquiry — payable whether or not it converts, and not scaled to insolvency fees earned — sits on the permitted side of the line.
- Keep introducer arrangements arm's-length and transparent. Written terms, a fixed rate card, and no percentage-of-fee element materially reduce risk.
- Let the client choose. Where an introducer passes a lead, the director should have a genuine choice of IP, not be funnelled to whichever firm pays most.
- Separate the introduction from the case decision. The IP who accepts the appointment should assess suitability and independence on the merits of the case, not on the identity of the introducer.
For background on how this sits within the wider UK legal position on referral arrangements, see Are Referral Fees Legal in the UK?, which covers the position across professions, not just insolvency.
Documentation, disclosure and safeguards your file should show
An RPB monitoring visit or a disciplinary enquiry — overseen at policy level by the Insolvency Service — will ask for evidence, not assurances. A well-run firm should be able to show, on any file that came via an introducer:
- A written introducer agreement setting out how any payment is calculated and confirming it is not contingent on appointment.
- A record of how the introduction arose and who first identified the IP as a candidate.
- Evidence that the acceptance decision was independent — capacity, expertise and conflict checks completed in the normal way.
- Disclosure to creditors, where relevant, of any commercial relationship with the introducer, consistent with the Code's transparency principle.
- Clear internal sign-off separating business development staff from the appointment-taking decision-maker where possible.
Firms building or reviewing an introducer policy may also find it useful to read Insolvency Code of Ethics: Referrals Explained, which walks through the broader ethical framework R340.4 sits within.
How Harbourfirst's introducer model fits the rules
Harbourfirst is a commission-based introducer, not a regulated insolvency practitioner or solicitor, and does not accept an appointment or act for a director's company itself. Our role is to connect directors of financially distressed companies — including those facing HMRC winding-up petitions — with regulated insolvency practitioners and solicitors who can advise them properly.
Because Harbourfirst sits outside the regulated appointment relationship, our commercial arrangements with firms are structured around marketing and qualifying-enquiry introductions rather than a share of insolvency fees tied to appointment outcome. Firms working with an introducer model like ours should still apply their own R340.4 assessment to any specific arrangement, document it, and satisfy themselves the payment structure sits on the permitted side of the line described above.
For a closer look at the specific risk of routing commission through a professional intermediary, see Routing Referral Fees Through a Solicitor: Risks.
Frequently asked questions
Can insolvency practitioners pay referral fees to another professional?
Not if the fee is calculated as a share of insolvency fees or is contingent on the introduction resulting in an appointment. R340.4 applies regardless of who the payment is made to — accountant, solicitor or general introducer.
Is a fixed marketing fee the same as a referral fee?
No. A fixed fee paid for advertising, sponsorship or a directory listing — payable whether or not it produces an appointment — is generally treated as a legitimate business cost rather than a prohibited appointment fee.
What counts as commission for insolvency introductions under the Code?
Any payment that varies with, or depends on, the introduction converting into an appointment. This includes percentage-of-fee arrangements and success-only payments, however they are labelled on an invoice.
Can a small thank-you gift or tip be given for a referral?
The Code's threat-based approach means even modest gifts or hospitality tied to appointment introductions should be treated with caution and assessed for self-interest risk, not assumed to be exempt because the value is small.
Do RPBs actively check introducer arrangements?
Yes. Monitoring visits and disciplinary processes routinely examine introducer agreements and fee flows, and RPBs will look at the substance of a payment structure, not just how it is described.
This article is general information, not legal, financial or insolvency advice, and does not cover every circumstance. Directors and firms should speak to a regulated specialist about their own position.
If you would like to be introduced to a regulated insolvency practitioner or solicitor to discuss your options, Harbourfirst can help — start an enquiry.