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Shadow Minister discovers how Government rules frustrate attempts to improve ‘Dodgy Director’ disqualification process

Work on a new online form to report delinquent company directors scrapped by Insolvency Service, despite 82% of the profession supporting its introduction

Last year the insolvency practitioner’s professional body, R3, set up a working group to design a new online form which would save money, contain better information, and allow the Insolvency Service to access the information they need more quickly.

This work was recently cancelled as the working group were told by BIS that any redesign of the form would not be allowed under the moratorium on new regulation for micro-businesses – this is despite that fact that 82 per cent of Insolvency Practitioners want to change to an electronic system, according to R3’s survey. Indeed, the survey further reveals that 80% of micro-businesses within the insolvency profession, the very businesses the moratorium purports to protect in this case, also support the change.

Toby House of CommonsToby Perkins commented:

“The government’s approach to regulation means that even sensible changes, supported by the overwhelming majority of Insolvency Practitioners – including those who are ‘micro businesses’ –are thwarted.  This would have led to a more cost-effective service for the public.  You couldn’t make it up.”

R3 President Lee Manning added:

“We were disappointed when the Insolvency Service called time on our joint work on an online D1 form, and the strength of feeling within the profession is shared by four out of five (82%) of our members.

“The micro-business moratorium is designed to protect these businesses from the burden of new regulation. The introduction of a simplified online form would, though, actually reduce the administrative burden on them, as well as helping to more effectively tackle delinquent directors. An online form is good common sense in this day and age.

Protecting the wider business community from unscrupulous company directors is essential in maintaining public confidence.”

Outdated methods, huge costs

An investigation by Labour’s Shadow Small Business Minister, Toby Perkins MP, has also revealed how waste in the Insolvency Service (part of the Department of Business, Innovation and Skills) is costing the tax payer and letting down honest, hard-working businesses across the country.

The Insolvency Service have been found to be using out-dated and costly methods of collecting information on delinquent directors, which severely compromises their ability to disqualify those who have acted dishonestly.

When an Insolvency Practitioner (IP) is appointed to a case they have a legal duty to file a report on the conduct of the director.  If they believe the director to be guilty they must complete a D1 form and return it to the Insolvency Service.

The form used is huge and has not been re-designed in over twenty years.  It fills a box file and must be filled in by hand.  In addition to huge unnecessary printing costs and the additional time it takes to fill in forms by hand the Insolvency Service pays for motorcycle couriers to deliver these forms to the practitioners!

In answer to Parliamentary Question tabled by Mr Perkins, the Government admitted that they do not keep any records on this and have no idea how much these couriers cost.

Toby Perkins explained:

“It’s bizarre that in the age of wireless internet and online forms the Government is throwing away taxpayers money by delivering huge files by courier bike to then be filled in by hand.  This out-dated practice is deflecting scarce resources from what the Insolvency Service should be focussing on: disqualifying unscrupulous company directors.

“The government is letting down the public and honest hard-working businesses when it gets this wrong.  The government itself estimates that for every disqualified director there is an £88,000 benefit to the economy, in terms of the economic damage that would have otherwise been caused to honest small businesses.  But the number of reported directors who are disqualified has dropped to just 21% this year – down from 27% for 2010-11 and from 45% ten years ago.

“Anything that impacts on the Insolvency Service’s ability to go after unscrupulous directors is bad news for honest small businesses, who are the lifeblood of the British economy.”

2 Responses to “Shadow Minister discovers how Government rules frustrate attempts to improve ‘Dodgy Director’ disqualification process”

  1. William cooney says:

    Hi my name is william. A sole trader whent bankrupt on me at the start of
    This year.
    I I’m shocked and feel very alone that as a person that as been done
    Out of £14,000 by a bankrupt . Thire is no HELP for me. Thire is loads loads of help
    For these bankrupts but not me.

    Can you tell us WHY THIS IS.

    William cooney

  2. tperkins says:

    Hi William.
    Sorry to hear you’ve been affected by this issue.
    If you live in Chesterfield, please feel free to contact my Constituency Office on 01246 386286 and I’d be happy to meet you to discuss it.

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Welcome

I am Toby Perkins, Labour's Member of Parliament for Chesterfield. If you would like to get in touch with me, my office is open and can be reached by phone on 01246 386 286. I also hold regular surgeries so that constituents can meet me and I can take up their concerns. If you would like to make an appointment then please do contact my office. Thank you for visiting.

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Tel: 01246 386286
Email: toby.perkins.mp@parliament.uk
Post: 113 Saltergate, Chesterfield, S40 1NF

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