The FCA and the Insolvency Service have signed a new deal to crackdown on misconduct after firms collapse.
Directors at firms that are collapsed or under investigation are facing tougher measures under the terms of the ‘memorandum of understanding‘, which will see the FCA and the Insolvency Service sharing more information in an effort to crack down on bad practices.
The deal commits the watchdogs to more timely sharing information and stronger coordination on enforcement activities like disqualifications.
The MoU also focuses specifically on the Insolvency Service and FCA’s sharing of information relating to companies or directors already under investigation.
The FCA says sharing of information is deemed in the public interest for both organisations, and is necessary for both carry out duties effectively.
The deal says: “It is envisaged that information provided as intelligence will be used by each organisation to help identify individuals or firms for targeted action; assist in targeting specified individuals or firms; or as part of an overall strategy to combat corporate or financial impropriety in relation to matters of specific concern or more generally.”
Under the terms of the MoU, company directors who do not meet minimum effective management requirements will have their information passed from the FCA to the Insolvency Service for the latter to consider the disqualification of the director and potential winding-up of the company.
The FCA may now also pass information to the Insolvency Service whether or not the person or company concerned is the subject of an investigation.
The Insolvency Service may also pass information to the FCA after any disqualifications, for the regulator to determine whether the person may continue regulatory activity, or if other legal action should be undertaken.
Insolvency Service chief executive Sarah Albon says the watchdogs share similar objectives despite their different responsibilities.
She says: “The MoU firmly establishes our relationship with the FCA and going forward we will endeavour to work closer together in order to put a stop to those companies and individuals who pay scant regard to the law and hurt economic confidence.”
The government initially outlined greater collaboration between the FCA and the Insolvency Service in its corporate governance reform in 2016.