FOI release

FOI21/22-157 - Numbers of directors found to be unfit

Updated 14 July 2022

Our ref: FOI21/22-157

Date: 22 February 2022

Dear

Re: Freedom of Information Act 2000

Thank you for your email of 7 February with clarification on 10 February 2022 in which you requested from the Insolvency Service:

• Under question 14 of the D1 form, section 3: the total number of directors reported as being considered unfit to be concerned in the management of a company for each of the previous 5 calendar years.

• The number of directors reported as being considered unfit.

Your request has been dealt with under the Freedom of Information Act 2000 (FOIA).

I can confirm the agency holds the information that you have requested and I have provided answers to your questions below.

The total number of D1 reports submitted since 1 January 2017 is 5. Within these reports, 16 directors were reported as being unfit by the insolvency practitioner. All reports were submitted in 2017.

Under section 16 of the Act (Advice and Assistance) you may find it useful to note:

The Small Business Enterprise and Employment Act 2015 made a number of amendments to the Company Directors Disqualification Act 1986. One of the main changes was to the director conduct reporting process from April 2016.

Prior to April 2016, insolvency practitioners and official receivers made the decision on whether to submit a D1 or D2/D3 (no matters of unfitness to report) form. The Insolvency Service’s Compliance and Targeting Team, acting for the Secretary of State, would then review all D1 reports to consider whether there was sufficient reason to investigate, and if any investigation would be in the public interest. The five D1 reports submitted in 2017 (as detailed above) were only captured as they were late submissions.

From April 2016 the paper forms submitted by insolvency practitioners were replaced by a single online return per company for all new appointments. Insolvency practitioners and official receivers are now required to enter details online for each company and list every person who had been a director of the company in the three years prior to the insolvency, regardless of whether they consider them to be unfit. Much of the conduct considered in that return (whether potentially unfit or not) is identified as taking place within the company rather than against individual directors.

The new reports are referred to as Director Conduct Reports (DCRs). Insolvency practitioners are no longer required to form an opinion as to whether a director is unfit at any stage of the process. The information provided in the director conduct report is subject to analysis by a Rules Engine (a computer programme). The Rules Engine carries out an initial sift of cases to identify those where there are sufficient indications of possible misconduct to require review by a member of staff from the Compliance and Targeting Team. The team reviews these reports, and any other information received. If they decide there is sufficient evidence of alleged misconduct to justify further investigation and that investigation is in the public interest, the case will be made available for allocation to an investigator.

The table below provides details of the number of DCRs submitted to the Insolvency Service during the period 1 January 2017 to 31 December 2021 (one report per company rather than per director), and of those reports, the number of companies ‘sifted in’ for further consideration by our Compliance and Targeting Team. Data is also provided for the D1 reports. Note that data is held by financial year.

Period	No of reports received	No of reports ‘sifted in’	D1 Reports
01.01.17 – 31.03.17	3268	1838	3
01.04.17 – 31.03.18	13931	8528	2
01.04.18 – 31.03.19	14672	9059	0
01.04.19 – 31.03.20	14781	8784	0
01.04.20 – 31.03.21	11385*	5722*	0
01.04.21 – 31.12.21	9826*	4165*	0

*Note. In November 2020, questions on the online form were changed to improve the quality of information provided and amendments were also made to the Rules Engine. This has resulted in a higher proportion of reports being automatically ‘sifted out’ as experience has established that too many inappropriate cases were being ‘sifted in’. Figures before and after this date are therefore not directly comparable.

The above figures provided are in relation to companies rather than individual directors. The Insolvency Service does not calculate the average number of directors per insolvent company, or the average number of directors within each company made available for investigation. However, I can tell you that where director disqualification has been achieved, the average number of director disqualifications per company is 1.2.

If you are not satisfied with the response we have provided you and would like us to reconsider our decision by way of an internal review (IR), please contact our Information Rights Team at [email protected] or by post at:

Information Rights Team
The Insolvency Service
3rd Floor
Cannon House
18 Priory Queensway
Birmingham
B4 6FD
United Kingdom

You also have the right to contact the Information Commissioners Office (ICO) if you wish for them to investigate any complaint you may have regarding our handling of your request. However, please note that the ICO is likely to expect an IR to have been completed in the first instance.

Kind regards

Information Rights Team

The Insolvency Service

The Department for Business, Energy and Industrial Strategy, Official receivers and the Adjudicator are Data Controllers in respect of personal data processed by the Insolvency Service. For the details about how personal data is processed by the agency, please see the full Insolvency Service Personal Information Charter here: https://www.gov.uk/government/organisations/insolvency-service/about/personal-information-charter