Insolvency Service clamps down on rogue directors

The number of orders to ban rogue directors from being involved in business has risen seven-fold, according to the Insolvency Service.

They claim that public interest disqualification orders prevented losses of as much as £92 million during the 2016-2017 financial year.

Such orders enable the Government to remove directors from positions of power when their behaviour is not fit to be a director of a company.

Increasingly, the Insolvency Service using the orders to tackle rogue directors by stripping them of their positions before they are able to cause more wrongs.

The agency, part of the Department of Business Innovation and Skills, has revealed that the number of public interest disqualifications jumped from four in 2015-2016 to 28 in the year that followed.

They also claim that a greater number of disqualifications could take place in 2017-2018, as 20 such disqualifications were procured in the first six months of the current financial year.

Each director that is disqualified saves creditors an estimated £114,000 according to the Insolvency Service.

Accountancy firm Moore Stephens believe the rise in disqualifications highlights efforts by the Insolvency Service to act at the early possible opportunity to stifle rogue directors.

As a result, both creditors and customers can be protected from their potentially negative actions, helping to create a safer business environment for firms to operate in.

By preventing directors who are suspected of malpractice from causing further damage, creditors and customers can also have greater confidence in any business being carried out.

Techniques also exist to tackle fraudulent activity, as businesses are unable to undertake forensic accounting processes to trace or recover assets.

Further figures from the Insolvency Service from earlier this year revealed the insolvency rate increased across all regions between 2015 and 2016 – marking the first rise since 2009.

Meanwhile the latest figures from Insolvency and Restructuring body R3 show that levels of corporate insolvency have varied wildly quarter to quarter in 2017.

By Phil Smith


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