Editorial - It's time to start getting tough

The channel is definitely becoming a more dangerous place to do business. Rarely a week goes by without PC Dealer reporting on a channel scam or another court appearance for a growing number of operators who seem to pride themselves on the size of the tide of destruction they leave in their wake.

In July, PC Dealer featured an exclusive, in-depth investigation that looked at the phenomenon of so-called 'serial directors' (PC Dealer, 1 July). These people set up a string of companies knowing full well they are likely to crash into oblivion. The companies not only leave creditors foaming at the mouth with often huge debts to service, but also hundreds of loyal employees without a job.

This is not the first time we have brought this to the attention of the channel. It has constantly amazed me that a dynamic industry such as ours has such a high failure rate. Of the three million company directors in the UK, about a quarter have at least one failed company to their credit.

Almost 4,000 of them have at least 10 failures adorning their CVs.

A couple of failures can add up to business experience. Another couple and you're either unlucky or have not been reading The Economist to find out when is a bad time to set up that storage company. But 10? Surely these people should be locked up for all our sakes.

There is one distributor that keeps its own list of directors with folded businesses in their dim and distant pasts - it is 500 strong. I say strong advisedly - if they fold, they could take your business down with it. Something has to be done soon to clear these people out of the channel. I have said this on many occasions and will say it again - no other European country would allow this type of anti-social behaviour. Legislation is often a poor way to fight problems, but current UK legislation allows anyone to set up other companies in the immediate aftermath of a string of failed businesses. The problem is that directors can be disqualified but it's a long and complex process for which there is a bill. And how many businesses are going to throw more money away after being stung by a dodgy business? Very few. That is the first anomaly that has to be sorted out. These people target smaller businesses, which have no financial ability to put legal processes into action. There is now a Department of Trade and Industry hotline to report those taking on the role of director while disqualified - use it. If we are all vigilant, we can prevent further rip-offs.

But the most urgent requirement is for the government to start looking at legislation to penalise those directors who abuse their positions.

Limited liability is a privilege which, if too often abused, will leave the channel uncompetitive at the very time it needs to be at its fittest.