The Office of Fair Trading is to investigate whether the big accountancy firms are overcharging for ‘helping’ to deal with companies that go bust.
A recent World Bank report showed the costs of closing a business in the UK are higher than other countries with similar or even better recovery rates.
A report by R3, the trade body for insolvency practitioners has also highlighted the cost of insolvency as a relative weakness of the UK’s regime.
The OFT’s study will look at the structure of the market, the appointment process for insolvency practitioners and any features in the market which could result in harm, such as higher fees or lower recovery rates for certain groups of creditors.
Senior director of services at the OFT, Clive Maxwell, explained that he wants to identify any potential problems within the corporate insolvency market to ensure that firms and practitioners are competing freely and that the market is working well for the end consumers.
It appears that there have been complaints about the amounts accountancy firms are charging by officials at Lord Mandelson’s department for business and the Government’s Insolvency service, which oversees corporate and personal bankruptcies.
