The OFT recommended "far-reaching reforms" after a study found that the market "may not work in the best interests of all creditors" in over a third of administrations and liquidations – processes that account for around 75% of insolvency practitioners' (IPs) earnings.

It stated that the current regulatory system was unable to protect the interests of small creditors.

Proposed changes include an industry-funded independent complaints-handling body with the power to review IP fees and actions, impose fines, and return overcharged fees to creditors, together with reform of the regulatory system that would reposition the Insolvency Service as the dedicated oversight regulator of the recognised professional bodies.

The OFT also called for targets, against which the performance of the regulatory regime can be measured, to be imposed to streamline the currently "inefficient" way in which the regulatory regime makes decisions.

Minuteman Press managing director Peter Wise said he wanted to see very strict criteria in place regarding directors that continue to trade a related entity after a business has gone into administration. "If we do nothing," he claimed, "this will continue to happen. It is crucial the insolvency industry is looked into."

However, for some printers, the OFT's announcement will offer little, particularly to the print industry, because of its timing.
Greg Nicholls, managing director at Response Envelopes, said: "It is a bit 'too little too late' in terms of pre-packs, they actually seem to have settled down. The government should have taken responsibility much earlier.

"Much of the damage for a business such as ours has happened already because we have to compete with companies that have ditched their debt and come back much stronger."