Pensions  

Insolvency expert frustrated with lack of director bans

Insolvency expert frustrated with lack of director bans

An insolvency expert has said she is frustrated about the low number of directors facing disqualification following firm failure, pointing to a lack of resources at the Insolvency Service.

Julie Palmer, regional managing partner at insolvency practitioners Begbies Traynor, said the service did not have the resources to prosecute people even after perceived serious misconduct.

She told BBC Radio 4 this week (18 January): "Generally we get quite frustrated in the insolvency profession. We see, we feel, far too few directors against whom disqualification action is taken.

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"Unfortunately the Insolvency Service, the resources were very much cut at a time that we felt as a profession more directors had probably taken risks on the back of a very prolonged recession.

"The resources need to be there for the Insolvency service to prosecute and it seems sometimes as if a very low percentage of directors have action taken against them for what sometimes we see as examples of quite serious misconduct."

Ms Palmers comments came after the latest high profile collapse in the shape of government contractor Carillion, although they were not aimed at that firm in particular.

Carillion made an application on 15 January to the High Court for compulsory liquidation after holding unsuccessful talks with its lenders and the UK government.

The firm has 13 final salary schemes in the UK with more than 28,500 members, and a deficit of £587m at the end of July.

The defined benefit (DB) pension schemes will now enter the Pension Protection Fund (PPF), meaning members face losses of up to 20 per cent of their pension if they have not yet retired.

Retired members will continue to receive their pensions in full, according to Tom McPhail, head of policy at Hargreaves Lansdown.

Another high profile collapse came in the form of high street retailer BHS, which collapsed in 2016.

The collapse of the company into administration led to questions about the way it was managed and whether its demise was inevitable.

Earlier this month the former owner of BHS, Dominic Chappell, was found guilty of refusing to provide vital documents to the pensions watchdog in relation to the £571m pension blackhole at the firm.

carmen.reichman@ft.com