The Insolvency Service have released their annual report, covering the period of 2015 to 2016. We have reviewed the 106 page document, highlighting some of the key findings of the report.
Introduction of New Online Services
The Insolvency Service described one of their “key achievements” for the year as the introduction of an online service for those making claims for redundancy pay when their employer is unable to pay. The online service was designed to make the process easier and swifter for claimants. Following the successful launch of the service, 100% of all redundancy claims were subsequently made digitally in February and March 2016. 81% of all claims received were subsequently actioned within two weeks.
Similarly, the Insolvency Service very recently launched an online portal for personal insolvency, as we discussed in our lead story in Spring’s edition of Insolvency News. The process saves both time and money for applicants. The Insolvency Service’s research previously found that the stigma of attending court was one of the reason that many individuals did not address their debt problems. Under the new online-only system, the applicant is no longer required to attend court.
The report also highlights work completed to launch a new interactive smart tool, designed to help people with debt problems discover which is the right debt solution for them.
Tackling financial wrongdoing
The report features the Insolvency Services’ efforts to deliver confidence to the marketplace that they are dealing robustly with directors who are guilty of misconduct.
Despite the continued decrease in insolvencies this year, the number of investigations and enforcement against both private individuals and businesses were extremely similar to the figures presented in the 2014-15 report. Therefore, this year the Insolvency Service has generally increased the levels of enforcement against rogue directors.
Of the 1,208 directors disqualified, the average length of disqualification was 6 years. 10% of directors were disqualified for a period in excess of 10 years. The Insolvency Service estimates the net benefit to the market (in terms of creditor damage prevented) for each director disqualified was over £100,000. This in turn means that that the Insolvency Services efforts have saved the market over £120 million pounds.
High profile insolvencies
The report highlighted that the Insolvency Service have had to deal with a number of high profile insolvency cases this year. Whilst naturally all insolvencies have their consequences and are extremely important to those who may be affected by the situation, high profile insolvencies have their own unique set of challenges. Generally, the higher the profile, the more people will be affected. High profile cases also strongly affect the stakeholder’s confidence in the Insolvency Service and their effectiveness with dealing with enforcement action.
Sahaviriya Steel Industries UK Limited (“SSI”) operated from a 16 square mile site, which included over 500 buildings. The business was owned by a Thai parent company, and following a Court Order, the Official Receiver was appointed. There was enormous media interest in the story, given the number of people and jobs effected by the insolvency. Of the approximately 2,000 employees previously working onsite, 800 were retained by the Insolvency Service to deal with the safe shutdown and continuing maintenance of the site. Despite the Official Receiver’s best efforts, a buyer could not be found for the business, and an announcement regarding business’ closure was announced on 12 October 2015.
Keeping Kids Company Limited was an incorporated charity operating from 17 different premises plus 37 schools. On 20 August 2015, a Winding Up Order was made against the company. Given the essential and sensitive work that the charity previously performed, the Insolvency Service had a difficult job to manage the transfer of confidential and delicate information. Over 600 employed and 850 self-employed staff needed to be dealt with, as well as the sale of a large amount of company assets. Understandably there was a large amount of media interest that needed to be dealt with appropriately.
Other key findings of the report
- The Insolvency Service issued 24,684 Debt Relief Orders, 97% of which were made within 48 hours of the application being made.
- One area of increased work load this year was with regards to recovery of miss-sold Personal Protection Insurance (PPI). The Insolvency Service made 14,117 PPI claims on behalf of individuals this year.
- The service received 340 complaints, or which 138 were upheld. 83% of complaints were dealt with within 10 working days.
- The service continues to hold the Customer Service Excellence standard, and independent quality mark which recognises customers that have a strong customer focus.
- The average number of full time equivalent employees was 1441.
- The Insolvency Service ran a voluntary exit scheme for employees in the 2015-16, following their initial scheme which was held in 2014-15. 111 applications for voluntary exit have been accepted, and the employees will be leaving the agency during 2016 – 17.