OFT to probe insolvency trade

THE Office of Fair Trading (OFT) has launched a market study into corporate insolvency following concerns over fees and recovery rates.

It said the study will look at the structure of the market, the appointment process for insolvency practitioners and, “any features in the market which could result in harm, such as higher fees or lower recovery rates for certain groups of creditors”.

According to a World Bank report the costs of closing a business in the UK are higher than other countries with similar or even better recovery rates. And a report by R3, the trade body for insolvency practitioners, also highlighted the cost of insolvency as a weakness of the UK system.

The OFT will collect and analyse data from interested parties including accountancy and law firms, Government departments, regulators and trade bodies. The study should be completed by the end of next year.

Clive Maxwell, OFT senior director of services, said: “We want to identify any potential problems within the corporate insolvency market to ensure that firms and practitioners are competing freely and that the market is working well for the end consumers. Efficient insolvency services are an important component of a modern market economy.”