Director disqualifications in the UK on the rise

The number of company directors being disqualified from work is increasing — and the situation could get worse before it improves.

11% more directors were disqualified between July and September than the same period last year, while 33% more were banned in the first six months of 2014 versus last year.

Figures from Zolfo Cooper’s Disqualification Tracker, which analyses trends in director disqualifications and associated company failures, reveals that 5.4 years is the average period of disqualification.

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This quarter, the financial and insurance sector saw the largest increase in company failures due to director disqualifications, with double the number of failures than last year. Property and construction also saw an increase of 55%.

Paul Huck, director at Zolfo Cooper, comments: “This quarter, approximately half of the director disqualification orders were due to wrong doing during the credit crunch of 2008-2010. With the likelihood of tougher measures being introduced when assessing conduct and when taking into consideration past misdemeanours, we could see further increases going forward.”

The majority of the disqualification orders were in relation to ‘serious unfit conduct’, with directors facing disqualifications of between two and five years. The number of companies which failed due to director disqualifications increased 14%.

Meanwhile, losses to known creditors fell in the third quarter, from £120m to £68m. HMRC continued to have the largest losses at £39m, with £7.5m owed to trade creditors and £8m to investors.

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