Government cuts mean there are likely to be fewer investigations into rogue directors, an expert has warned.
Julie Palmer, partner in the Salisbury office of business rescue and recovery specialist Begbies Traynor, said this could mean businesses being hoodwinked by unscrupulous directors who have slipped through the net.
This move follows what she described as a “concerning increase” of 17 per cent in the number facing disqualification over the past year.
Ms Palmer said the Insolvency Service (IS) is under pressure, having been ordered to reduce its expenditure by 11 per cent this year.
The IS is the Government organisation responsible for administering and investigating the affairs of bankrupts, companies and partnerships wound up by the courts, and the disqualification of unfit directors.
“The service has acknowledged that the cuts will lead to a reduction in the number of investigations it is able to pursue and, therefore, there are likely to be fewer disqualifications,” added Ms Palmer.
“What this may mean for businesses is that there is a greater need to stay vigilant and make all the necessary checks into the companies they deal with.
“There are individuals out there who can be very plausible. Prepare to be sceptical. It is a lot better than being hoodwinked and finding out later you have lost money.”
Official studies for the service last year estimated that each disqualification saves £103,000 of future losses to creditors. The 11 per cent cuts equate to nearly 200 directors not being disqualified and around 50 live companies not being investigated in response to complaints from the public.
* See April’s Swindon Business News for an overview of business rescue services in Wiltshire.
