16th November 2017.
Rogue Directors Rise
The numbers of director disqualifications has seen an increase of 600 per cent this year, and the Insolvency Service is looking up ways to remove these rogue individuals altogether.
According to new data from the Insolvency Service, twenty-eight disqualifications were obtained by the government agency to remove rogue directors from their positions in 2016/17. This is seven times more than the figure the year before.
According to accountancy firm Moore Stephens, the increase was due to the Insolvency Service starting disqualification proceedings earlier, in an attempt to protect both customers and creditors.
Over the past year, the Insolvency Service has prevented an estimated £92 million in losses.
A change in the law in 2015 has made it easier to reprimand them, with evidence scope widened when submitting a disqualification order.
Mike Finch, restructuring and insolvency partner at Moore Stephens, welcomed the agency’s action against suspect directors, but warned that suspected individuals can cause further harm if they are not adequately penalized.
He further encouraged more businesses to introduce proper disciplinary measures against suspected directors, and hoped the recent rise in disqualifications has given creditors and consumers “more confidence” in the system.
“The Insolvency Service is working very closely with other government departments, in particular the Home Office Immigration Enforcement, to take action in cases where the company is still active and not subject to insolvency proceedings”, Finch added.
James Salmon for the Credit Protection Association said “CPA strongly support action against rogue directors who can do significant harm to unsuspecting creditors and customers. We maintain a database of disqualified directors which is available to our members. If you are a member and are concerned about an individual, you can check to see if they are on the database.”
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