Insolvency Service to sharpen-up enforcement alongside FCA
The Financial Conduct Authority (FCA) and the Insolvency Service have confirmed that they will be joining forces in a bid to sharpen-up their enforcement activities.
In mid-May, the two organisations grouped together to sign a Memorandum of Understanding, which the Insolvency Service said would “put a stop to those companies” that pay little regard to corporate law.
According to the FCA and the Insolvency Service, the new partnership will enable both organisations to take more ‘pronounced action’ against directors and companies operating against the public interest.
A recently published Insolvency Service consultation document has set out a number of proposals geared towards strengthening corporate governance and ensuring greater fairness for all stakeholders in insolvencies.
Some key proposals outlined in the consultation include:
- Extending powers to investigate directors and former directors who might be avoiding accountability by allowing their companies to dissolve instead of going through the formal insolvency process.
- New powers to reverse outcomes and challenge complex transactions that remove value prior to a company’s insolvency to ensure a fairer distribution of a company’s assets when it fails.
- Disqualifying and/or holding directors personally liable when there is evidence to suggest they have sold a struggling company or subsidiary ‘recklessly’.
The Insolvency Service has also confirmed that it will share information relating to misconduct, investigations and enforcement with the FCA in order to better tackle corporate and financial misconduct and financial crimes.