An introducer agreement insolvency firms use should set out, in writing, exactly what the introducer is paid for, what conduct standards apply, and how client data is protected — because a loosely worded arrangement can put the firm's regulatory standing at risk. This article sets out the clauses a well-drafted agreement needs, and the ethics rule that shapes all of them.
Insolvency practitioners (IPs) routinely receive referrals from accountants, brokers and commission-based introducers such as Harbourfirst. That relationship is legitimate and common. But because IPs are bound by their Recognised Professional Body's (RPB) Code of Ethics, the agreement governing the introduction has to be built around one restriction in particular: the rule on paying for referred work, commonly referenced as R340.4.
Why an Introducer Agreement Insolvency Firms Sign Must Respect R340.4
R340.4 is the provision in the insolvency profession's ethical framework that restricts an insolvency practitioner from accepting a referral where payment for that referral is contingent, undisclosed, or structured in a way that could be seen to compromise the practitioner's objectivity. It does not ban working with introducers — it requires transparency about the relationship and the fee.
A properly drafted introducer agreement insolvency practitioners can rely on will therefore:
- Record the fee or commission arrangement in writing, with no verbal side-agreements.
- Confirm the fee is disclosed to the client (the director or company) before appointment.
- Make clear the introducer has no role in the practitioner's professional judgement, case strategy or fee-setting on the engagement itself.
- Avoid any structure where the size of the introducer's payment varies with the outcome of the insolvency process.
If your firm's introducer arrangements are new to this, it is worth reading how the equivalent restriction applies on the legal side — see Introducer Agreements: What the SRA Requires for the solicitor-facing version of the same principle.
Defining what the introducer is paid for
The single most common weakness in introducer agreements is vagueness about what, exactly, triggers payment. "Referral fee" is not a defined term until the agreement defines it. Firms should specify:
- The triggering event — is the fee payable on introduction, on first meeting, or only once the practitioner is formally appointed?
- The calculation method — a fixed sum per introduction, or a percentage, and against what base figure.
- Timing of payment — commission paid on invoice, on completion of the case, or in stages.
- What is excluded — the introducer is paid for the introduction, not for advising the client, drafting documents, or influencing the conduct of the case.
Whether referral fees of this kind are lawful at all is a question firms and introducers both ask early on. It is worth pointing new introducers to Are Referral Fees Legal in the UK?, which sets out the general legal position separately from the ethics constraint covered here.
Many firms also cap the fee as a proportion of the practitioner's own remuneration, rather than as an open-ended sum. This keeps the arrangement proportionate and easier to defend if a regulator ever asks why a particular fee was agreed.
Scope, conduct standards and marketing controls
Beyond the fee mechanics, the agreement should define the boundaries of what the introducer can and cannot do or say. This protects the firm's reputation as much as its compliance position.
Scope of the introducer's role
Set out plainly that the introducer's role ends at the introduction. The introducer should not describe itself as regulated, should not give insolvency or legal advice, and should not represent that it can guarantee an outcome such as stopping a winding-up petition.
Conduct standards
Include a conduct clause requiring the introducer to:
- Deal with prospective clients honestly, without exaggeration of urgency or risk.
- Disclose the commercial relationship with the firm on request.
- Refer clients on a fair basis, not steer them toward the firm because of the fee alone.
Marketing and branding controls
Any marketing material, website copy or scripts the introducer uses that refer to the firm should require prior sign-off. This avoids the introducer implying the firm's endorsement of claims it has not approved, or using language the firm's RPB would not permit in its own name.
Data protection and client confidentiality
An introducer typically holds personal data about the prospective client — name, contact details, and often sensitive information about the company's financial position — before the firm is formally engaged. The agreement needs to address this directly, not leave it implied.
- Define each party's role under UK data protection law: usually the introducer is a separate controller for the data it collects, and the firm becomes a controller once the client is referred.
- Require the introducer to have a lawful basis and a privacy notice covering how it collects and shares client data with the firm.
- Include a confidentiality clause covering commercially sensitive information the introducer may see, such as case volumes or fee structures.
- Set out how data is transferred securely and how long each party retains it.
The government's overview of UK data protection obligations is a useful starting reference when drafting this section — see gov.uk's guidance on data protection. Naming this clearly in the agreement avoids disputes later about who was responsible for a data breach involving a shared client record.
Audit rights and termination triggers
A written agreement should give the firm the practical means to check the arrangement is working as intended, and a clean way to exit it if not.
Audit and record-keeping rights
The firm should reserve the right to request records of how introductions were made, what was said to the client, and evidence that fee disclosure took place. This matters if the firm's RPB ever asks how a referral arrangement operates in practice.
Termination triggers
Common grounds for immediate termination include:
- The introducer misrepresenting the firm, its regulatory status, or likely outcomes to a client.
- Breach of the fee disclosure or data protection terms.
- The introducer being investigated by, or losing standing with, any relevant regulator.
- A change in RPB or legislative guidance that makes the existing fee structure non-compliant.
Before signing any new arrangement, most firms run a due diligence check on the introducer itself — its ownership, how leads are generated, and its own regulatory footprint. Due Diligence on Insolvency Introducers covers what that check should include. Insolvency practitioners should also confirm their own regulatory position is current; the Insolvency Service's guidance on becoming and remaining an authorised practitioner is a useful reference point — see gov.uk's guidance on insolvency practitioner authorisation. Where obligations under the Insolvency Act 1986 are relevant to how a case is conducted once appointed, the full text is available at legislation.gov.uk.
Frequently asked questions
Can an insolvency practitioner pay a commission-based introducer at all?
Yes, provided the fee is disclosed to the client and does not compromise the practitioner's independence or judgement on the case. The arrangement should be in writing and consistent with the firm's Code of Ethics obligations.
What fee structures are generally acceptable?
A fixed fee per successful introduction, or a percentage of the practitioner's own fee disclosed to the client, are both common. Structures that vary with case outcome, or that are hidden from the client, are the ones to avoid.
Should an introducer agreement be exclusive?
Exclusivity is a commercial choice, not a compliance requirement. Some firms prefer non-exclusive arrangements so they are not dependent on a single introducer for referral volume.
Does my RPB need to see the introducer agreement?
Most RPBs do not require pre-approval of individual agreements, but they may ask to review referral arrangements as part of a monitoring visit. Keeping the agreement, fee records and disclosure evidence on file is good practice.
What happens if the introducer breaches the agreement?
A well-drafted agreement gives the firm the right to suspend or terminate immediately, and to require the introducer to correct any misleading statements made to clients before the relationship ends.
This article is general information, not legal or insolvency advice. Firms should take advice from their RPB or a solicitor before finalising an introducer agreement.
If your firm is reviewing or setting up introducer arrangements, Harbourfirst can introduce you to directors seeking a regulated insolvency specialist on transparent, compliant terms — start an enquiry.