Caroline Summers

Chief executive of R3, Caroline Summers, said the group welcomed the focus on intervening earlier to help “people and businesses address financial difficulties,” as well as tackling misconduct and misuse of corporate structures.

The agency’s strategy outlined a change in how it will work in future, making sure it spots risk sooner, guides people with financial or business problems towards the right options for help, and makes the whole system easier to navigate.

It is also promising to work more closely with Companies House and HMRC and use better intelligence to help identify deliberate misconduct by directors sooner, including those abusing the rules around phoenix companies, promising to “focus on those that cause the most harm, returning assets to creditors and money to the economy.”

As part of its strategy, there will be a renewed focus on improving the insolvency system, working with the sector to make it easier for them to do their job “while maintaining high standards.”

The Insolvency Service has confirmed it has removed the £90 debt relief order fee and that a new digital connection with debt advisors has helped reduce application times. It also created “practical guidance,” which can be found on the Director Information Hub.

It also confirmed that the Redundancy Payments Service supports first payments within 11 days for around 70,000 people each year. It has also updated practitioner protections, launched a review of support for smaller businesses, and is working on closer intelligence-sharing with Companies House to strengthen the wider system.

The Insolvency Service will give more people, directors and businesses access to trusted guidance before problems escalate, more customers will get the support they need, and people will have a clearer understanding of their options and obligations.

These changes will support faster debt relief and quicker redundancy payments, while helping viable businesses address financial distress at an earlier stage. In the longer-term plans, it is hoping to utilise better intelligence and work more closely with Companies House, HMRC and law enforcement bodies to identify serious misconduct sooner, help build cases more quickly, and focus resources on “organised economic crime and other conduct that causes the greatest harm.”

It will also crack down on phoenix companies, stating: “Abusive phoenixism is when directors leave debts in one company and continue the same business through another, harming creditors, customers and legitimate businesses.

“By 2028, a larger taskforce of 50 people will use better data to detect high-risk cases sooner, intervene before more money is lost and recover assets where wrongdoing is proved.”

It will also work with practitioners in the insolvency sector to remove “avoidable burdens,” explaining their “expertise will also inform work to help viable businesses address financial difficulty sooner.”

Duncan Beach, chief executive at the Insolvency Service, said: “Understandably, we are often seen as the organisation that steps in when things have already gone wrong. But by helping people and businesses make informed choices sooner and returning money and assets to productive use more quickly, we can make a greater contribution to economic confidence and growth.

“At the same time, we will continue to take firm action against those who abuse the system for personal gain – not least those behind abusive high street and phoenix companies. We will target the individuals and companies causing the greatest harm, protecting legitimate businesses and strengthening trust in the economy.

“This strategy is about acting earlier, moving faster and working more closely with partners across the system. I am asking directors, insolvency practitioners and our wider stakeholders to join us in creating the conditions for greater confidence, resilience and growth across the UK economy.”

Caroline Summers added: “We are particularly encouraged by the commitment to work in partnership with the insolvency profession to create a more proportionate, less burdensome and modern insolvency framework.

“We look forward to continuing the conversation with Duncan Beach and colleagues to help turn the strategy’s ambitions into practical improvements that benefit insolvency professionals and the businesses and individuals with which they work.

“Creating a modern, sustainable Insolvency Service and delivering effective insolvency legislation that delivers the tools that the profession needs to rescue businesses will benefit everyone.”