The regulatory framework is not a zero-failure regime. Therefore, it is possible that football clubs may enter administration despite the best efforts of the regulator. We would of course, hope that this is rare. There already exists a legal framework for companies—and that includes football clubs—to enter into administration, which is detailed in the Insolvency Act 1986, and in many cases this existing framework has enabled clubs to go into administration and re-emerge as solvent clubs. It should be noted that those clubs often re-emerge in a lower league as a result of the sporting sanctions placed on them by the competition organisers.

Given that the existing administration regime seems to work well in relation to appointments initiated by creditors, it is not necessary for the regulator to cut across that process. However, there are occasions where the administration of a club is not initiated by creditors but by the club itself. A club can appoint administrators directly, and so does not require a court to sanction the appointment in advance. In those circumstances, there have been occasions in which some stakeholders have had cause to question the relationship between the insolvency practitioner appointed as administrator and the football club.

That is why, in those specific circumstances, the appointment of an administrator requires the regulator’s approval to ensure that the process is transparent and to avoid conflicts of interest. Such approval should give all stakeholders, particularly fans, more confidence in the system and more confidence that the outcome is the best available, in the circumstances, for the individual club.

The requirement to seek approval from the regulator for the appointment of an administrator applies to clubs that have a licence, and those that should have a licence but for whatever reason do not, as well as clubs that were formerly regulated within the previous five years. That is included to ensure that clubs are not deliberately run so that they are no longer in the leagues that the regulator has oversight of, to then take advantage of being an unregulated entity to appoint an administrator without approval of the regulator.

I commend the Clause to the Committee.