ICAS recommends consumer protection measures for retail insolvencies
The Institute of Chartered Accountants of Scotland has called for the Government to introduce legislation to require retailers that accept deposits, to hold them in a separate bank account that is not available to offset borrowings.
The recommendation follows in the wake of a number if high profile insolvency cases, including Zavvi, World of Leather and MFI, where consumers lost money paid prior to insolvency for products which they did not receive or gift vouchers which were no longer redeemable.
The recommendation is included in ICAS’s response to the Insolvency Service’s consultation into the insolvency market.
Ann Condick, director of insolvency at ICAS, said: “This would be a bold move by Government and it would need to consider how the requirement would work for smaller businesses who may not find it easy to operate a separate bank account. However, it is legislation that, with careful consideration, would be extremely beneficial for consumers and other unsecured creditors. We have witnessed a rise in high profile retail insolvencies over the last few years with some consumers losing out over the Christmas period which can be a difficult time for businesses and members of the public alike. Legislation of this nature would go some way to ensuring better returns for as many unsecured creditors as possible.”
