Aipedia: Insolvency practitioners

AI forensic bank statement analysis

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

AI can analyse company and debtor bank statements to flag preferences, undervalue transactions and misconduct, but the IP must verify the results. Missed transactions or wrongly flagged ones can each lead to claims from creditors or directors.

Part of: AI in Insolvency practitioners

In short

Forensic bank analysis is among the main AI uses R3 found in insolvency practice. Tools can categorise thousands of transactions and flag connected party payments, but they depend on complete data and good matching rules. False negatives can mean a lost recovery and a creditor claim; false positives can mean unfounded proceedings against a director. The Insolvency Code of Ethics requires the IP to judge whether output is fit for purpose (R321.1) and to guard against automation bias. PI usually responds to resulting negligence claims, subject to the wording.

How AI is used on bank statements

Bank statements are the backbone of most insolvency investigations. Machine analysis can ingest years of company or debtor statements, categorise every transaction, match payees to connected parties and flag patterns such as round-sum transfers, payments to directors, unusual cash withdrawals or a cluster of supplier payments just before the insolvency. R3's 2026 report lists investigation document review and forensic bank analysis among the main uses of AI in the profession.

For a personal insolvency, the same tools can scan a debtor's statements for gambling, transfers to family or undisclosed income.

The duties that apply

The Insolvency Code of Ethics applies to bank analysis in the same way as any other technology output:

R321.1: decide whether the output is appropriate for the intended purpose. A list of flagged transactions is evidence to investigate, not a conclusion.
115.1 A6: insufficient data or lack of expertise. Missing accounts, unconverted foreign currency statements or poor-quality scans undermine the analysis.
117.3 A2: automation bias, including trusting an empty exceptions report.
R320.3 and R320.5: where an outside provider runs the analysis, evaluate whether its work is fit for purpose and review the arrangement periodically.
R104.3 to R104.6: confidentiality of the account data you upload.

False positives and false negatives

Bank analysis can fail in two directions, and both can lead to claims.

False positives are innocent transactions flagged as suspect. If an IP acts on them without proper checks, a director or connected party may face an unfounded demand or proceedings. That can produce a costs order or a complaint, and a director may allege the office holder acted unreasonably.

False negatives are real preferences, transactions at an undervalue or misconduct the tool did not flag, for example because a payee name was abbreviated or the payment was routed through a third party. Creditors may later argue a recovery was lost.

Illustrative scenario: an analysis tool matches connected parties by exact name. A director's spouse trades under a business name, so a series of large payments to that business is categorised as ordinary supplier spend. The exceptions report is clean, the reviewer relies on it, and no claim is brought before the director's assets are dissipated. A creditor later discovers the link and complains to the RPB, alleging negligence.

How PI usually responds

A creditor claim that a recovery was lost through negligent investigation, or a director's claim that proceedings were brought without proper grounds, is the kind of civil liability claim PI usually responds to, subject to the policy terms and excess. The IPA's PII guidance makes PII compulsory for individual members. Where an RPB complaint comes first, whether defence costs are covered depends on the wording.

Both scenarios often surface as a complaint or a letter before any claim is made. Consider early whether that is a notifiable circumstance; see circumstance notification explained and the consequences of late notification.

Practical controls

Reconcile the statements loaded against the accounts known to exist and the full period under review.
Give the tool a connected party list that includes trading names, family members and associated companies.
Sample-test "clean" categories as well as the exceptions.
Do not issue demands or proceedings on a flag alone; verify against underlying documents.
Record the tool's settings, the data loaded and the reviewer's conclusions on the case file (R130.2).
Feed findings into SIP 2 investigation work and director conduct reporting.

How Apex helps

Apex arranges PI for insolvency practitioners. A broker can review whether your policy responds to claims from both creditors and directors arising from AI-assisted investigations. More in our IP PI guide and the insolvency practitioners hub.

Sources

Frequently asked

Is AI bank statement analysis reliable enough for insolvency investigations?

It can process far more transactions than a person, but its results depend on the data loaded and the matching rules used. Under R321.1 the IP must decide whether the output is appropriate for the purpose, so flags and clean results both need checking.

What is the risk of acting on a false positive?

If an IP pursues a director or connected party over a transaction that turns out to be innocent, the respondent may seek costs or complain to the RPB. Verifying each flag against source documents before any demand reduces that risk.

Does PI cover claims from directors as well as creditors?

IP PI wordings usually respond to third-party claims alleging negligence in the conduct of an appointment, whoever brings them, but cover depends on the policy terms and exclusions. A broker can check how your wording treats claims by directors.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.