Statement following publication of Transparency and Trust
Press Release – 16 July 2013
Philip King – Chief Executive of the Institute of Credit Management (ICM) – has welcomed the Discussion Paper: Transparency and Trust from the Department of Business, Innovation and Skills (BIS), and especially the thinking around the future disqualification of directors:
“It is right that directors who are deemed to be ‘unfit’ should be disqualified, that the length of disqualification should be increased, and even perhaps in the worst examples of malpractice that they should be banned from working again in any sector. This would certainly protect creditors in the short-term, albeit that they would see little by way of their money back.
“But failures leading to insolvency are more often about incompetence, rather than a deliberate act of sabotage. The stick needs to go hand in glove with the carrot, which is why I especially welcome the proposals to provide failed directors with the training and support they need to become rehabilitated where it is beneficial to do so. I agree that the public interest would be better served by helping directors to ‘bounce back’ from an initial set back, and believe it is much more in keeping with the entrepreneurial spirit and drive that the Government is looking to engender.
“I also think that BIS could go further: providing training after the event is shutting the proverbial stable door after the horse has long since bolted. It seems strange that anyone can become a director of a business without any formal qualification, and with little or no idea of the responsibilities and liabilities that they are taking on. It would be better, surely, that some minimum test of competency is devised early to ensure that less companies fail and more companies succeed in the first place.”
Mr King, a former Sector Champion for Insolvency in the Government’s Red Tape Challenge, also welcomes the proposals with regards to improving the financial redress for creditors: “The concept of giving power to a court to make a compensatory award to a creditor is especially welcome. I agree that this would increase the likelihood of culpable directors being called to account for their actions, whilst providing better recourse to creditors who have suffered.
“There are practical implications of this approach which need to be fully considered, as the document suggests, but it is sending out the right message that rogue directors who have abused the insolvency process will no longer be able to get away with it without some form of recompense for those they have affected.”
The discussion paper can be read here.
The Institute of Credit Management (ICM) is Europe’s largest credit management organisation, and the second largest globally. The trusted leader in expertise for all credit matters, it represents the profession across trade, consumer and export credit, and all credit-related services. Formed over 70 years ago, it is the only such organisation accredited by Ofqual and it offers a comprehensive range of services and bespoke solutions for the credit professional (www.icm.org.uk) as well as services and advice for the wider business community, including the acclaimed ICM/BIS Managing Cashflow guides.
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