Directors searching online for help with arrears do not enter a neutral market. The Insolvency Service's own advertising guidance warns about misleading debt websites using claims of government backing, unsubstantiated debt write-offs and the lure of 'free' solutions. The Insolvency Practitioners Association has separately warned that practitioners' names have been added to websites to get round Google's restrictions on lead generators. That is not outsider rhetoric. It is the regulator and the trade body warning about the same sales environment. (gov.uk) Director Freedom is not alleging that every licensed practitioner behaves badly. The point is narrower and more serious: a director in distress often meets branding before advice, and branding can be built to steer the case towards an appointment long before anyone has tested whether a cheaper, director-led fix still exists. The official case against the Atherton companies in September 2024 showed how dangerous misleading 'company rescue' claims can be when directors are told they can shed liabilities and keep control without consequences. (gov.uk)
Ministers have known for years that the regulatory model lacks public confidence. In its response on the future of insolvency regulation, government said there were strong arguments for a single regulator but decided not to create one, opting instead to keep the Recognised Professional Bodies and revisit the issue later. The same response said it intended to legislate, when Parliamentary time allows, to regulate firms offering insolvency services. (gov.uk) That matters because the system is still built around professional bodies rather than a single public regulator. The Insolvency Service had to issue its first reprimand against a regulator in June 2023, finding ICAEW had failed to monitor restrictions placed on Adrian Duncan, who was then understood to have misappropriated nearly £4 million in estate funds. In April 2025, Chartered Accountants Ireland was allowed to stop acting as an authorising body because the number of practitioners it licensed was too low to be commercially sustainable. Directors are entitled to ask whether this patchwork is really the strongest protection for people making the biggest decision of their business lives. (gov.uk)
Follow the incentives and the picture sharpens. In 2025, 18,525 of 23,938 company insolvencies in England and Wales were CVLs, or 77% of the total. In February 2026, CVLs were still 78% of all company insolvencies. If a practice is built around volume, the market is telling you where the work sits. (gov.uk) The Insolvency Service's own CVL research found that pre-appointment fees were paid in 83% of completed cases, that 51% of cases carried a pre-appointment fee between £2,500 and £5,000, and that the median pre-appointment fee was £4,000. This is why directors should treat the so-called free first call with care: the free part may end the moment the appointment paperwork starts. (assets.publishing.service.gov.uk)
The harder question is what this process delivers. In the Insolvency Service's CVL research, 86% of cases produced no payment to any class of creditor. The median amount paid to creditors as a share of assets realised was 0%, while the median payment to post-appointment IP fees was 21%. For unsecured creditors, only 266 of 2,697 cases saw any payment at all. (assets.publishing.service.gov.uk) Those figures do not prove bad faith by every office-holder, but they do demolish the lazy claim that liquidation automatically serves creditors better than any director-led fix. If the median creditor return is zero and the median fee recovery is not, directors and creditors both have grounds to demand sharper scrutiny of cost, value and whether formal insolvency was really the first answer that should have been put on the table. (assets.publishing.service.gov.uk)
The sales pitch often implies that paying for a licensed liquidator buys safety. The official guidance says something different. The Insolvency Service's own director hub states that in a CVL the liquidator will consider director conduct and submit a conduct report. In the CVL research sample, 54% of cases were sifted in as in scope for investigation and 10% were then targeted for investigation. (gov.uk) The wider enforcement picture shows why that matters. In 2024-25 the Insolvency Service recorded 1,037 director disqualifications, 169 criminal prosecutions, and 118 compensation orders or undertakings worth £3.6 million. Many of those outcomes related to Covid support abuse rather than ordinary trading decisions, and that distinction matters, but the point remains: the process directors pay to enter is also a gateway into state investigation. Calling that protection without a proper explanation is not director-first advice. (assets.publishing.service.gov.uk)
Once a company is in liquidation, ordinary transactions are reviewed through an insolvency lens rather than a trading one. The Insolvency Service's technical guidance explains that preference claims turn on a desire to put one creditor in a better position, and where the beneficiary is a connected party that desire is presumed unless the contrary can be shown. The same guidance says the lookback period can extend to two years for connected parties, and that insolvency can be presumed in connected-party transaction at undervalue cases unless shown otherwise. (gov.uk) Professor Andrew Keay's work on wrongful trading has long argued that the law, as drafted and applied, does not achieve what it set out to do and needs reform. That matters to directors because the gap between commercial reality and insolvency theory has been visible in the academic record for years, yet the practical burden of that gap still falls on owner-managers who were trying to keep staff paid, customers served and creditors calm. This is an inference from the law's structure and the academic critique, but it fits the practical complaint directors raise time and again: decisions taken in the fog of rescue are judged later in the calm of liquidation. (eprints.whiterose.ac.uk)
Directors do have options that do not begin with a paid insolvency appointment. HMRC reported in its 2024-25 annual report that more than 90% of Time to Pay payment plans are completed successfully. Companies House says an online DS01 strike-off application costs £13 where the company is eligible, though that route is not available where the company is insolvent or still has debts and assets to sort out. Those are basic facts, but they are too often absent from the early sales conversation. (assets.publishing.service.gov.uk) The gap between those official routes and the early sales script is precisely why a director-first adviser should explain, in writing, why a paid appointment is better than the non-appointment routes still open that week. If that explanation is vague, slowing the process down and taking advice from a solicitor or accountant who is not being paid to land the appointment is a sensible safeguard. This is an inference from the official evidence, not a substitute for case-specific legal advice. (assets.publishing.service.gov.uk)
The government cannot keep treating this as a niche professional argument. Its own documents accept strong arguments for a single regulator, accept the need to regulate firms offering insolvency services, accept the need for a scheme to restore those harmed by poor conduct, and accept that creditor outcomes in CVLs are often negligible. Yet directors in April 2026 still enter a market where branding can mislead, CVLs dominate, and the complaint route runs first through the practitioner and then the practitioner's authorising body. (gov.uk) Director Freedom's conclusion is blunt. The question is no longer whether the framework has weak points; the official record already answers that. The real question is why ministers have allowed a director-facing distress market to grow faster than the protections around it, and why directors are so often invited to fund the very process that will later examine their conduct. Until that changes, directors should read every free consultation as a commercial gateway, not an act of public service. (gov.uk)