Business groups call on government to scrap legal reforms that will cost businesses and taxpayers £160m per year

There have been warnings from Business groups, including accounting and insolvency bodies, the institute of Credit Management, and the British Property Federation, that government legal reforms could cost creditors over £160 million per year from next April – with rouge directors being the big beneficiaries.

Six influential business groups have signed and sent a letter to the Prime Minister, David Cameron and Justice Secretary, Chris Grayling, outlining their concerns and calling for the government to scrap the planned change.

The letter highlights the planned changes and describes them as being “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

From April 2015, insolvency litigation will no longer be exempt from the crackdown on ‘no-win, no-fee’ legal funding introduced by 2012 reforms. This type of funding is often the only way creditors can afford to pay for court cases to retrieve money from rouge directors that have wrongly taken money out of a failed business.

Under the current system, successful claims see both creditors’ debts returned and the rouge director charged for the cost of the court case.

Source: www.r3.org.uk

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Rising Property Values Prompt Equity Release Loans

Borrowing drawing on the equity tied up in people’s property has hit its highest quarterly level since records began in 2002, figures show.

The Equity Release Council trade body has stated that equity release lending totalled £375.5m in the third quarter of the year. 

More than 5,500 people aged over 55 released equity from their homes over the same three months, it added. 

However, the Money Advice Service suggests this form of borrowing can be “expensive and inflexible”.

The average value of equity release also reached its highest level since 2002 in the third quarter of the year, with homeowners typically “releasing” £67,467. 

Nigel Waterson, chairman of the Equity Release Council, claimed that for many people aged over 55, pension savings were failing to cover rising costs. 

Source: http://www.bbc.co.uk

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