Rogue Directors Deserve Tough Approach

3rd May 2018.

Insolvency Service chairman Stephen Allinson writes to the Telegraph to defend the organisation’s approach to identifying and disqualifying unfit company directors.

A bad, inefficient or morally bankrupt director can spell disaster for the whole business and its employees. For a business to be prosperous they need a strong leader at the helm, who will prioritise the business’s best interests over their own. Insolvency Service chairman Stephen Allinson has written to the Telegraph with the sole intention of defending that sentiment. If the UK is not only to reach the Brexit deadline next year but keep pace with rival economies, our businesses need to get tough on those who could trip us up.

This is similar in feeling to the current debate concerning late payment, where the government’s soft treatment of perpetrators is causing conflict with SMEs, who demand the adoption of strict penalties or fines. Despite the best of intentions, a soft approach is not always effective, and inefficiency can be particularly dangerous when the collapse of a company could impact hundreds of households and financial futures.

At the Credit Protection Association, our credit management products include a thorough register of disqualified directors, allowing our members to peruse its contents to ensure neither their customers or suppliers qualify. This has prevented future conflict and afforded our members the opportunity to exit a potentially unhealthy business relationship.

In his letter to the Telegraph, Stephen Allinson insists that it is in the public’s interest to “follow the evidence”, with more than 1,200 directors of small and large companies disqualified last year.

“The agency is targeting serious cases can most clearly be seen in the average period of disqualification: 5.7 years. This is a real deterrent against abusing the protections afforded by limited liability trading which is essential to maintaining economic confidence and protecting the interests of creditors”, he adds.

For every business owner, it is important to exercise caution. Complacency can drive a business head-first into trouble, and even into collapse. It is therefore vital that businesses keep checks on all customers, suppliers, and of course even within its own four walls.

Whether you are concerned about external players, or those within, approaching a third party for aid can help. At the Credit Protection Association, our disqualified directors register offers our members protection against bad business practices, while our debt recovery services provide them with the cash flow to improve their own. If bad cash flow has forced you to compromise the efficiency of your management strategy, CPA can help you get back on track.