OFT investigates high cost of corporate insolvency

The Office of Fair Trading (OFT) is carrying out a market study into the way corporate insolvencies are conducted in the UK.

It follows concerns among ministers and the Insolvency Service itself that the system is not working as fairly and as efficiently as it should. The World Bank recently published a report showing that the cost of closing a business in the UK is higher than in many other countries with similar or even better recovery rates.

The study will examine the structure of the market and look for features such as higher fees or lower recovery rates that could be detrimental to certain groups of creditors.

The study covers all of the UK with the OFT collecting and analysing information from various professions including law firms, accountants, government regulators and trade bodies.

Clive Maxwell, OFT Senior Director of Services, said: "We want 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."

We shall keep clients informed of developments.