More than half of the company directors banned in Great Britain since 2023 were found to have misused Covid-19 financial support, with 1,683 disqualifications related to the abuse of government-backed loans. This accounts for 55% of the total 3,280 disqualifications, highlighting the ongoing impact of the pandemic's emergency lending schemes. The majority of these disqualifications, 3,054, were issued under Section 6 of the Company Directors Disqualification Act, which covers unfit conduct by directors of insolvent or dissolved companies. A further 344 bankruptcy and debt relief restriction cases were recorded over the same period.
The number of disqualifications has eased since peaking at 1,222 in 2023/24, with 1,021 recorded so far in 2025/26. However, the amount of compensation recovered from disqualified directors is increasing, with over £1.8 million recovered in the last three years. More than half of this total, £974,000, was recovered in the last year alone, with 123 people ordered to repay compensation. The Insolvency Service has also seen a 32% rise in compensation orders and undertakings granted in the last year.
The construction sector has seen the highest number of disqualifications, with 536 directors banned over the last three years. This is likely due to the industry's struggles with rising material costs, supply chain disruption, and cash flow pressure. Other sectors with high numbers of disqualifications include accommodation and food service activities, wholesale and retail, and administrative and support services. London has recorded the highest regional total, with 820 disqualifications, while Wales has seen the sharpest rise, with a 175% increase in the last year.
A disqualification order can have significant consequences for an individual, banning them from acting as a director or being involved in company management for up to 15 years. It can also bar them from certain other roles, such as charity trusteeships and school governance positions. However, a disqualified person may still be able to trade as a sole trader or hold shares in a company, as long as they do not take part in company management. The Insolvency Service has launched an AI-powered taskforce to pursue rogue directors, indicating that enforcement is unlikely to soften.
The message for owners of struggling firms is clear: the pandemic support ledger has not been closed, and the Insolvency Service is still working through it. Directors can apply to court for permission to remain involved in company management, but timing is crucial, and specialist legal advice is recommended to ensure the best outcome. With the Insolvency Service recovering increasing amounts of compensation and pursuing rogue directors, it is essential for companies to ensure they are complying with all relevant regulations and laws.
