The number of director disqualified by the Insolvency Service has dipped to levels which are causing concern for insolvency practitioners (IPs), according to R3’s president.
Frances Coulson said the number of directors disqualified by the Insolvency Service had halved in the last few years to a rate of just 20% of those referred to the regulatory body by IPs.
Giving evidence to a parliamentary committee on behalf of insolvency trade body R3, Coulson said: “Disqualification of directors is an important part of the Service’s role and a part which has dipped.
“IPs report on directors to the Service and want to see that taken to disqualification, but currently only 20% are being taken to disqualification and that is something we are concerned about.”
Coulson acknowledged that the Insolvency Service has had to contend with funding cuts and staff shortages, and added that the relatively stable current insolvency levels did little to help the Service’s funding, which relies on fees from insolvency cases.
The Insolvency Service has submitted evidence to the Business, Innovation and Skills committee, which reveals that director disqualifications have in fact risen from 1,173 in 2007/08 to 1,437 in 2012/11. The average director disqualification period imposed by the Service stands at 6.1 years.
Vernon Soare, executive director of the Institute of Chartered Accountants in England and Wales (ICAEW), added that the Insolvency Service needed to be clearer about its objectives at the start of each year, and work with the eight Recognised Professional Bodies (RPBs) to achieve them.
“It is difficult to see what they have been trying to achieve in the last 12 months,” he added.
Stephen Speed, chief executive of the Insolvency Service, is due to appear before the same committee to give evidence in February.
A spokesperson for The Insolvency Service said:
“It would be inappropriate to comment further ahead of Stephen Speed’s session giving evidence to BIS Select Committee later this month.”
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