R3 concerned over Insolvency Service cuts
THE Government’s plans to crack down on “rogue directors” have been welcomed by the insolvency trade body R3.
But North West regional chairman Richard Wolff has raised concerns about the impact of cutbacks at the Insolvency Service which is responsible for enforcing existing director rules.
Business secretary Vince Cable wants to introduce tougher penalties for “rogue and reckless” company directors that could include them paying compensation to victims.
The proposals, aimed at cracking down on sacams such as landbanking, are expected to go through Parliament before next year’s general election.
Mr Wolff, head of corporate recovery and insolvency at JMW Solicitors, said: “R3 has been calling for improvements to the disqualification process for some years now. It is encouraging that the government has made director disqualification such a priority.
“However there is still more work to do before reality matches rhetoric. More investment in the Insolvency Service is needed, as is reform of how rogue directors are reported.
“Director disqualification is currently an area of real concern for both creditors and the insolvency profession. While the number of reports of rogue directors has increased by over half in the last 10 years, the number of directors actually disqualified has fallen by around 25% at the same time.”
He added: “Unless the government is able to up its game, creditors – including small businesses and the taxman – will be exposed to people who are responsible for business failure after business failure. Budget cuts at the Insolvency Service are one major factor here: expertise and experience have fallen victim to staff cuts. Much more investment is needed if the government is going to achieve its aims.”
