Director Disqualification is not always a given, even when there are adverse findings by regulatory authorities
In this case, our client was facing an Insolvency Service (‘IS’) investigation that could easily have led to a director disqualification order, having been forced to place his company into liquidation, following a large fine from the Information Commissioner’s Office (‘ICO’). Neil Davies one of our director disqualification solicitors, acted swiftly and was able to convince the IS to drop its case.
The background to this case
Our client was the sole director of a digital marketing company, generating leads for various financial service providers. The Company was trading well until an investigation was launched by the ICO, in relation to concerns over the Company’s compliance with the Privacy and Electronic Communications (EC Directive) Regulations 2003 (‘PECR’).
The investigation spanning almost three years, resulted in a fine of £80,000. The Company’s inability to pay ultimately caused the director to place the Company into liquidation.
Despite the fact that the ICO investigation related to only 11 complaints, giving a complaint rate of just 0.000051%, the Insolvency Service (‘IS’) considered that the mere existence of the ICO fine was tantamount to misconduct and justified a director disqualification order.
With a separate business trading well, the director was keen to avoid a disqualification order. He got in touch with Neil Davies and Suky Mann hoping for a swift and positive outcome.
Our director disqualification solicitors respond
Our analysis of the Company failure was a far cry from the picture painted by the IS. Following a painstaking review of all of the ICO documents and The Company’s internal policies, we were able to demonstrate that our client was not an errant director who had a wilful disregard to the regulatory obligations of the Company. Rather he was a director that despite his best efforts simply got it wrong.
We evidenced that there has been no history of non-compliance, and as soon as the Director was notified of the investigation he ceased all email marketing even though there had been no findings at that stage. The Director took all reasonable steps to mitigate any harm to the Company and its clients. Indeed, the Director acted proactively to ensure regulatory compliance through the engagement of professional advisors, and crucially the reliance on that advice was reasonable in all the circumstances.
Perhaps most damaging to the IS’s case was that had it not been for the imposition of the fine and the ICO’s refusal to permit payment over time, the Company would still have been trading.
In light of the above, the IS swiftly abandoned its investigation against the Director.
The Director commented……….
The Director was delighted and relieved by the IS’s U-turn. In thanking Neil and Suky, he said:
“Well, I wasn’t expected the Insolvency Service to drop it after one letter! That’s an amazing result you’ve achieved for me. I’m glad I can finally put this to bed and concentrate on earning a living”.
This case reminds us that even where the Company under investigation has been the subject of adverse findings by regulatory authorities, a director disqualification order is not always a given. Click here to see some more testimonials.