Orders to ban rogue directors increase seven-fold

Public interest disqualification orders are used by the government as a way of removing directors whose behaviour makes them unfit to be director of any company.

Accountancy firm Moore Stephens said the Insolvency Service is increasingly using these orders to remove potentially rogue directors from their positions before they can do more wrong.

Data from the Insolvency Service shows that the number of public interest disqualifications have increased from four in 2015/2016 to 28 in 2016/2017.

The accountancy firm said this type of disqualification is on course to grow even more in 2017/2018, after 20 of these disqualifications were procured in the first six months of this year.

The Insolvency Service also estimated it saved creditors around £114,000 for each director disqualified.

Moore Stephens said the large increase in disqualifications is evidence of the Insolvency Service looking to initiate disqualification proceedings at the earliest possible opportunity. This is done to protect both customers and creditors of the respective companies.

Mike Finch, restructuring and insolvency partner at Moore Stephens, said: “Directors who are suspected of malpractice have in the past gone on to cause further damage at other businesses. This makes it vital that the Insolvency Service prevent them acting at the earliest possible opportunity.

“The fact the number of public interest disqualifications is continuing to rise should give creditors and consumers more confidence that unfit directors are being removed from the system.”