The body made the call in its annual report, hoping to force a U-turn after Westminster scaled back the money available for the Insolvency Service to comb through the reports produced by insolvency practitioners on the conduct of the directors of collapsed companies.

‘The deterrent effect of the Company Directors Disqualification Act depends on directors believing that any misconduct will be investigated and, where appropriate, penalised and on the commitment and thoroughness of the IPs, in writing their reports on the conduct of directors’ of insolvent businesses,’ the IPC said.

‘The effectiveness of the system could easily deteriorate if the perception develops among directors and IPs that there is a significant chance that the latter’s reports will not be followed up.’

The IPC also made calls for the Insolvency Service and the regulators to raise the bar in the individual voluntary arrangements marketplace by publishing annual statistics laying out the completion and failure rates of IVAs set up in each of the previous five years.

The body also recommended publishing equivalent numbers for each IP and the firms that they work for.

‘The IPC plans to continue to follow up these recommendations during 2008 through discussions with all the relevant organisations,’
it added.