Disqualified directors on the up

The sharp increase in banned company directors may not be due to the government’s new ‘fast-track’ disqualification process, according to leading insolvency practitioners.

Last week the DTI revealed that over 900 directors had been banned between March and September last year. Competition and consumer affairs minister Melanie Johnson said the 24% increase was ‘a direct result of the fast-track process introduced by the Insolvency Act 2000’.

The process, introduced in April 2001, allows directors of troubled companies to admit to difficulties and speed the insolvency process by avoiding lengthy court battles.

But Roger Oldfield, president of R3, the association of business recovery professionals, believes the evidence is not available to tell whether fast-tracking is the explanation. He said it is too early to tell. ‘It takes time for changes work their way through,’ he argued.

Oldfield also said directors who put their hands up to fraud are relatively few. He added that the statistic proves ‘insolvency practitioners are doing their work correctly and the DTI disqualification unit is pursuing their cases through the courts’.

According to Oldfield, fraud tends to increase in times of adversity and financial difficulty and people take greater risks than during more stable periods.

Related reading