According to a report by the organisation, in 2009/10 insolvency practitioners submitted 7,030 reports on directors' behaviour, which they believed warranted further investigation.

However, in the same year just 1,387 cases were concluded by the Insolvency Service and R3 claims that the number of cases being taken forward has dropped from 40% in 2003/04 to 20% in 2009/10.

Reporting rates have soared: in 2007/08 there were 3,991 directors reported, while 2008/09 saw 4,752 directors questioned by insolvency practitioners. However the number of directors actually investigated has remained steady with 1,145 and 1,252 investigations concluded respectively.

R3 president Steven Law said: "This mechanism is in place to protect the general public and other businesses from dishonest directors. Not punishing directors who are blameworthy sends out a dangerous message to others."

He added that R3 wanted to see blameworthy directors fined and wants to work with the government to establish a financial and corporate education programme for disqualified directors.

R3 added that this would help prevent the sequential failures from directors which it claims damages public confidence. It believes that increasing the percentage of insolvency practitioner reports taken forward by the Insolvency Service would also prevent this.

The organisation's report also featured the most common reasons for insolvency practitioners reporting directors, with failure to pay tax debts the most frequent with 35%, followed by obtaining personal benefits from the company (28%) and appropriation of assets to other companies (24%).