The Insolvency Service Enforcement Framework Executive Summary
Published 4 October 2024
Applies to England, Scotland and Wales
© Crown copyright 2024
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1. Role of the Agency
The Insolvency Service is an executive agency of the Department for Business and Trade (DBT) and provides public services to those affected by financial distress or failure. We provide the structures that deal with insolvency and the financial misconduct that is sometimes associated with it, giving investors and businesses confidence and supporting economic growth.
2. Enforcement Purpose and Powers
We deliver and promote a range of investigation and enforcement activities, both civil and criminal in nature, to tackle financial wrongdoing and ensure confidence and trust in the UK’s economic environment. The actions we take are driven by the need to act in the public interest, particularly in consideration of the following strategic factors: 1. The prevention of financial harm. 2. The maintenance of a level playing field for business by preventing abuse of the corporate and insolvency regimes. 3. The promotion of confidence and trust in the UK economy, to support economic growth.
We contribute to wider government objectives through partnering and collaboration across the enforcement and regulatory landscape to meet common objectives.
The cases we investigate and enforcement actions we pursue are aimed at disrupting ongoing harm, protecting against likely future harm, or prosecuting for harm caused. We use our powers to pursue the most effective outcomes and in a way that addresses financial wrongdoing at all levels.
We have a range of enforcement tools at our disposal. These include: 1. Investigating and winding-up companies trading contrary to the public interest. 2. Investigating and acting to disqualify directors of companies (including dissolved companies) who have shown themselves unfit to manage companies. 3. Acting to disqualify directors based upon investigative material provided by other government departments and regulators. 4. Undertaking criminal investigations and prosecutions for insolvency and corporate-related criminal offences. 5. Seeking to freeze and forfeit the proceeds of unlawful conduct[1] and to restrain and confiscate property in support of our criminal enforcement activity. 6. Seeking Compensation Orders against directors where misconduct for which a person has been disqualified has caused loss to one or more creditors of a company. 7. Acting to sustain restrictions on bankrupts, who have acted improperly or abused the insolvency regime. 8. Imposing sanctions against Recognised Professional Bodies if they breach their statutory objectives. 9. Taking direct action against individual Insolvency Practitioners cases where it is in the public interest.
3. How we Use our Powers
The prioritisation of our investigative work and decisions about which of our powers to use are informed by one or more of the following factors: harm caused, impact on others/the economy, wider strategic objectives, risks posed, resources available, and public interest considerations.
We make sensible resource-based decisions to optimise our enforcement outcomes and the impact we deliver for stakeholders. We deploy our powers in a complementary way to minimise duplication of investigative effort, both internally and with external partners. The powers we use are kept under review throughout an investigation.
To prevent ongoing and future harm, we are committed to tackling financial wrongdoing across a range of activities and at all levels; this includes cases which will have the highest impact. We have skilled investigators and with the expertise of our in-house legal team we have the capability across the agency to handle highly complex cases coming within our remit We ensure that our highest impact cases and investigation strategies have appropriate levels of strategic oversight, governance and resource.
4. Collaborative Working and Partnering
We play a key role in supporting wider government objectives, working collaboratively and proactively with other government agencies and departments (e.g., Companies House, National Crime Agency) and partner organisations in the regulatory and law enforcement landscape, to support wider economic crime initiatives, including efforts to combat serious and organised crime.
This includes sharing information and intelligence with other departments and agencies to ensure that the right bodies are using the right tools to obtain the most effective enforcement outcomes.
As members of the Government Counter Fraud Profession, all our investigators and investigation managers have opportunities to broaden their knowledge and experience through participation at GCFP events and through networking opportunities.
5. Director Education
Alongside our director disqualification investigation activity, we work to raise standards of corporate behaviour by publishing education materials for directors, to help directors understand their duties and know where to turn for impartial advice.
[1] Forfeiture powers are not currently being used but is something we have under review.