Insolvency firms are set to be formally regulated for the first time.

New reforms will be announced this week, but they fall short of a pledge to establish a new watchdog.

The Insolvency Service, part of the Department for Business and Trade, will unveil plans which mean firms as well as individuals can face sanctions for misconduct, as reported by Sky.

The announcement will come nearly two years after a consultation was launched to pave the way for a new independent regulator to sit within the Insolvency Service.

The consultation was launched in the wake of the collapse of firms including Carillion, which drew attention to the conduct of company directors and auditors.

The reforms are set to close a regulatory gap and bring insolvency firms in line with the rules governing providers of audit and legal services.

Providers of insolvency services have for decades been overseen by four different Recognised Professional Bodies (RPBs), including the Insolvency Practitioners Association and the Institute of Chartered Accountants in England and Wales (ICAEW).

It's thought these organisations will be responsible for implementing the new rules governing insolvency firms.