More than five years after the first Covid-19 business support schemes closed, abuse of those loans remains the leading cause of director disqualifications. However, the Insolvency Service is also broadening its enforcement activity to tackle a wider range of director misconduct, signalling that scrutiny of directors remains as intense as ever.
The latest enforcement data shows that 280 directors have already been disqualified during 2026/27, including 250 disqualifications under Section 6 of the Company Directors Disqualification Act 1986 for unfit conduct in relation to insolvent companies. Some 161 of those cases involved allegations relating to abuse of Covid-19 financial support schemes, with an average disqualification period of 9.3 years.
Although Covid-related misconduct no longer accounts for quite the same proportion of cases as immediately after the pandemic, it remains by far the largest single category of director misconduct pursued by the Insolvency Service.
The figures demonstrate that investigations into Bounce Back Loan (BBL) and other Covid support fraud continue apace within the wide enforcement process. Directors who overstated turnover, applied for support to which they were not entitled or used government-backed loans for personal purposes remain firmly within the regulator’s sights, despite the passage of time.
Recent prosecutions underline the Insolvency Service’s continuing focus on these cases. In July 2026, a Birmingham director received a 22-month suspended prison sentence after fraudulently obtaining a £37,500 BBL by claiming turnover for a company that had never traded. The Insolvency Service is also seeking to recover the proceeds of the fraud.
In a separate case, the director of a CBD products business fraudulently secured Covid support before laundering the proceeds through multiple bank accounts to help fund the purchase of a property in Lanzarote. He received a three-year suspended prison sentence, an eight-year director disqualification, was ordered to undertake unpaid work and now faces confiscation proceedings under the Proceeds of Crime Act.
Together, these cases demonstrate that directors who abused pandemic support schemes remain exposed to both criminal sanctions and lengthy disqualification several years after the original misconduct.
Director disqualification is far more than a symbolic penalty. A disqualified individual cannot act as a director or be involved in the promotion, formation or management of a company without the court’s permission. Breaching a disqualification order can result in criminal prosecution and personal liability for company debts incurred during the period of disqualification. In many cases, directors may also face compensation proceedings, confiscation orders or other financial recovery action, meaning the consequences can extend well beyond the loss of the right to act as a company director.
At the same time, the enforcement landscape is evolving. Alongside Covid-related cases, the Insolvency Service is increasingly focusing on repeat insolvencies, abuse of the corporate structure, unfair treatment of HMRC, phoenix companies and other serious breaches of directors’ duties.
The objective is not only to remove unfit directors from the marketplace, but also to protect creditors and reinforce confidence in the UK’s corporate framework.
While Covid-related misconduct continues to account for a significant proportion of enforcement activity, directors should not assume that it is the Insolvency Service’s sole focus. The regulator has made clear that it will continue to pursue misconduct wherever it threatens confidence in the UK’s corporate regime, including abuse of insolvency procedures.
The lesson is that directors’ duties remain under close scrutiny, particularly when businesses encounter financial difficulty. Taking early professional advice, maintaining proper corporate records and documenting key board decisions can make a significant difference if conduct is later questioned.
As recent cases demonstrate, enforcement action may follow several years after the relevant events, making good governance and timely advice more important than ever.
This article is written by Alice Fanner, Manager at Buchler Phillips, an independent boutique firm, with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.