The misuse of Covid support schemes has reached concerning levels, with 831 directors banned by The Insolvency Service for abuse in 2023-24. This marks an 80% increase from the previous year. The average director disqualification length stands at nearly 10 years, reflecting the severity of misconduct.
About Covid Support Schemes
Introduced in 2020, the Covid Bounce Back Loan Scheme aimed to assist small and medium-sized firms. The Scheme provided low-interest rate loans, with default to the bank predominantly financially guaranteed by the Government. However, with little in the way of controls or checks in place the scheme was, unfortunately, open to abuse.
Abuse of Covid Support Schemes
Many saw the Covid Support Schemes as ‘free money’ and applied regardless of whether they qualified or not. The abuse of this schemes has been reported significantly, with many using the loans for personal gain, contrary to the terms of the loan.
Repercussions for Those Who Have Abused The System
Enforcement measures against abusers has resulted in;
- Company liquidations
- Criminal convictions
- Compensation orders
- Director disqualifications.
Since 2021, The Insolvency Service has banned 1,430 directors for such abuses, demonstrating a firm stance against financial misconduct. We fear this is just the tip of the iceberg.
The Insolvency Service’s efforts continue, with ongoing director disqualifications for bounce back loan misconduct. In 2022-23, 459 directors were disqualified, with 140 banned in 2021-22, the first year after the scheme ceased new applications.
These statistics underscore the need for robust oversight and review of Government support initiatives to protect the public – especially during the current economic climate.
How Can BRI Business Recovery and Insolvency Help?
At BRI Business Recovery and Insolvency, we specialise in business recovery and advice as well as personal insolvency. If you or your business are experiencing any financial pressures and believe you will benefit from free impartial advice from BRI Business Recovery and Insolvency, please get in touch us to see how we can assist you.