Financial background checks: bankruptcy, insolvency and judgments
A financial background check does not have to mean a credit report. For most roles that justify any financial check, the questions are narrower: is this person bankrupt or under a debt restriction now, can they lawfully act as a company director, and do they have unpaid court judgments? Public registers answer those questions with far less intrusion. The Individual Insolvency Register covers England and Wales; Scotland and Northern Ireland have their own insolvency registers, and the Register of Judgments, Orders and Fines covers England and Wales.
The Information Commission (ICO) draft guidance on pre-employment vetting, under review following the Data (Use and Access) Act 2025, still sets the test. You should only vet where you have a legal obligation or can identify significant and particular risks, such as theft, and you must only collect the minimum information you need. In practice that means naming the question the role raises, asking the candidate first, then searching the right register for the person you intend to appoint. A full credit report is a separate and more intrusive step, covered on our credit checks page.
Match the check to the question the role raises
Start with the risk you have written down for the role, then choose the lightest check that answers it. The ICO's example is a company recruiting a director that runs a bankruptcy search on the successful candidate, and it says it is not necessary to carry out these checks on all candidates.
| Question the role raises | Lighter check | Where it applies |
|---|---|---|
| Is the person bankrupt, or in a Debt Relief Order or Individual Voluntary Arrangement, now? | Individual Insolvency Register | England and Wales |
| The same question in Scotland or Northern Ireland | Register of Insolvencies; the Northern Ireland registers for DROs, BROs, IVAs and bankruptcy orders | Scotland; Northern Ireland |
| Are they under extra restrictions for dishonest or blameworthy conduct? | Individual Insolvency Register and the list of people with bankruptcy or debt relief restrictions (last 3 months) | England and Wales |
| Can they lawfully act as a company director? | Companies House disqualified directors search, plus an insolvency search | Companies registered in the UK |
| Do they have unpaid court judgments, orders or fines? | Register of Judgments, Orders and Fines | England and Wales; similar registers exist for Scotland and Northern Ireland |
| Anything older, overseas or outside the registers | A written declaration from the candidate | Anywhere |
Start with a declaration
The ICO says vetting goes beyond checking what candidates tell you about themselves, and that if you have questions about information a candidate has provided, you should contact them. A written declaration is the natural first step: ask only about matters the role makes relevant, then check the answer against a register.
For roles under the FCA's fit and proper test, For roles under the FCA's fit and proper test, FIT 2.3.1G says the firm should have regard to financial soundness factors including, but not limited to, any judgment debt or award, in the UK or elsewhere, that remains outstanding or was not satisfied within a reasonable period, and any arrangements with creditors, bankruptcy, bankruptcy restrictions orders or sequestration. A declaration built on that list covers overseas matters the UK registers will not show. Our financial services page covers the wider FCA rules.
Insolvency registers across the UK
The Individual Insolvency Register covers insolvency cases in England and Wales, including bankruptcies (with the discharge date), Debt Relief Orders and Individual Voluntary Arrangements. You can search it by name, or by trading name for sole traders. In Scotland you search the Register of Insolvencies. In Northern Ireland there are separate searches for DROs and BROs, for IVAs, and for bankruptcy orders through the ICOS Online Searching Modules.
A clear result only tells you about the present. In England and Wales, GOV.UK says bankruptcy usually ends automatically after 12 months, the register is updated within 3 months of discharge, and records are usually removed within 3 months of a case ending. If the role needs to know about older insolvency, ask the candidate. If an entry looks wrong, GOV.UK says to contact the office that dealt with the insolvency.
Bankruptcy restrictions and company directors
In England and Wales, while someone is bankrupt they cannot act as a director of a company, or create, manage or promote a limited company, without the court's permission, and cannot borrow more than £500 without telling the lender. The restrictions last until the bankruptcy ends. In Great Britain, section 11 of the Company Directors Disqualification Act 1986 makes it an offence, without the court's leave, to act as a director or take part in the promotion, formation or management of a company while an undischarged bankrupt, while a bankruptcy or debt relief restrictions order or undertaking is in force, or during a debt relief order moratorium.
If the official receiver thinks a bankrupt person has been dishonest or is to blame for their debts, the court can make a bankruptcy restrictions order (BRO), or the person can give an undertaking with the same effect. A BRO extends the restrictions for between 2 and 15 years. GOV.UK says the list of people with bankruptcy or debt relief restrictions covers the last 3 months, and that after that the Individual Insolvency Register does not include these penalties, although you can ask the official receiver dealing with the case about a person with current restrictions. The Insolvency Service says a BRO can bar people from being a charity trustee, a trustee of many pension schemes, or holding various posts in education and health. For a role like that, check with the appointing body.
The Register of Judgments, Orders and Fines
Section 98 of the Courts Act 2003 requires a register to be kept, in accordance with regulations, of High Court and county court judgments, county court administration orders, sums to be paid under a magistrates' court conviction or order, and sums payable under tribunal decisions, including employment tribunal awards. It covers England and Wales. In a 2023 consultation, the Ministry of Justice said the register is run by Registry Trust Ltd, a not-for-profit company, on its behalf, and that the same company keeps similar registers for Scotland and Northern Ireland. The register can be accessed publicly, and a small fee is charged for a search.
GOV.UK says a county court or High Court judgment stays on the register for 6 years. If the person pays in full within one month, they can get it removed. If they pay later, it can be marked as satisfied, but it stays on the register for 6 years. The Ministry of Justice says a judgment may also be removed entirely if, for example, a court sets it aside.
Two cautions. Unpaid magistrates' court fines can come from criminal convictions, and the ICO says personal data relating to criminal convictions and offences has its own rules. And a matching name is not proof: confirm the entry belongs to your candidate before you rely on it.
Weighing what you find
A register entry records a past event; what it means for the role is your judgement. For FCA roles, FIT 2.3.2G says limited financial means will not, in itself, affect suitability, and the FCA expects firms to take a similar view. Our view: for other roles too, ask what the entry tells you about the risk you documented. A discharged bankruptcy after a business failure is different from a recent judgment the candidate did not mention.
Where findings do not match what the candidate told you, the ICO says you should let them explain, consider that explanation and keep records of your decisions. In Great Britain, a blanket financial rule can be indirect discrimination under section 19 of the Equality Act 2010 if it disadvantages people sharing a protected characteristic and you cannot show it is a proportionate means of achieving a legitimate aim.
Destroy search results as soon as it is reasonably practicable, keeping a record of the outcome and your decision. If you want a second view on which financial checks a role justifies, ask HRjoy. We can also introduce you to our screening partners.
What to tell the candidate
- Before you search, which registers you will check, why the role needs it and who will see the result.
- That they can explain anything a search finds before you make a decision.
- How long you will keep the results. The ICO says vetting information should be destroyed as soon as it is reasonably practicable.
- That a wrong insolvency entry is corrected through the office that dealt with the case, and a wrong judgment entry through the court that made the judgment.
- That they can ask for a copy of their personal information; the ICO says organisations usually have one month to respond.
Sources
- Pre-employment vetting of candidates · ICO
- Search the bankruptcy and insolvency register · GOV.UK
- Becoming bankrupt: restrictions · GOV.UK
- Becoming bankrupt: when bankruptcy ends · GOV.UK
- Bankruptcy restrictions orders and undertakings · GOV.UK (Insolvency Service)
- County court judgments for debt: CCJs and your credit rating · GOV.UK
- Including claimant data on the Register of Judgments, Orders and Fines · GOV.UK (Ministry of Justice)
- Courts Act 2003, section 98 · legislation.gov.uk
- Company Directors Disqualification Act 1986, section 11 · legislation.gov.uk
- Company director disqualification · GOV.UK
- FIT 1 General · FCA Handbook
- FIT 2 Main assessment criteria · FCA Handbook
- What is criminal offence data? · ICO
- Equality Act 2010, section 19 · legislation.gov.uk
- Getting copies of your information (SAR) · ICO
General information for employers in the UK, not legal advice. HRjoy advises on screening policy and fair process. We do not run checks ourselves; where you need checks run, we can introduce you to our screening partners. Check the official sources for your situation.
When it’s justified
Usually justified
- Anyone you intend to appoint as a company director: an insolvency search on the successful candidate, which is the ICO's own example of targeted vetting, and in our view a disqualified directors search as well.
- FCA senior manager, certification and (in core and enhanced firms) non-SMF board director roles, where the firm must assess fitness and propriety and FIT 2.3.1G says it should have regard to financial soundness. A declaration and register searches usually cover it.
Only if the role justifies it
- Roles with real authority over money, payments or client assets, where you have documented a specific risk of theft or fraud.
- Posts that the Insolvency Service lists as barred to people under a bankruptcy restrictions order, such as charity trustee or some posts in education and health. Check with the appointing body.
Rarely or never justified
- Searching every applicant. The ICO says you should not routinely vet all candidates unless the law requires it.
- Treating a discharged bankruptcy or a paid judgment as an automatic bar, without asking what happened.
Questions
Something else? Ask us.
Can we refuse a job because someone has been bankrupt?
Not automatically. A person who is currently bankrupt cannot act as a company director without the court's permission, so for director roles it matters. For other roles, consider how long ago it was, whether a bankruptcy restrictions order was made, what the candidate says and how it relates to the risk you documented. For FCA roles, limited financial means does not in itself affect suitability.
How long does a county court judgment stay on the register?
GOV.UK says 6 years, unless the person pays in full within one month, in which case they can get it removed. A judgment paid after one month can be marked as satisfied but stays on the register for 6 years. This is the Register of Judgments, Orders and Fines for England and Wales.
Will the insolvency register show a bankruptcy from several years ago?
Not necessarily. The register only shows current or recently ended cases: GOV.UK says records are usually removed within 3 months of an insolvency case ending. Discharge usually comes after 12 months, but the official receiver or trustee can carry on dealing with the case after that. If the role genuinely needs to know about older insolvency, for example under the FCA's fit and proper test, ask the candidate to declare it.
Related checks
- Credit checks on job candidates When a UK employer can justify a credit check on a candidate, how it differs from insolvency and director searches, and what to tell applicants.
- Directorship and company checks on job candidates How to check a candidate's directorships and any disqualification on the Companies House register, what it verifies, and when the check is proportionate.
- Adverse media checks on job candidates When a UK employer can search the press and online sources for negative coverage of a candidate, and how to handle namesakes and allegations.
- Employment references: what employers can ask and when When to ask for references, what to ask, the sector rules for care, schools, early years and FCA firms, and how to treat candidates fairly.
Sector guides
Also covered in our guides for Charities and volunteering.
Related answers
- Can misconduct outside work affect whether someone is fit and proper under FCA rules? Yes. FCA guidance says conduct in someone's private life can be relevant to their fitness and propriety, especially dishonesty, a lack of integrity, violence or sexual misconduct. Firms need not monitor staff's private lives or social media. They need only look into private life where there is a good reason, such as an allegation that would call someone's fitness into question if true.
- What are the protected characteristics under the Equality Act 2010? The Equality Act 2010 lists nine protected characteristics: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. In Great Britain, employers must not discriminate against job applicants, workers or former workers because of any of them.
- How should employers handle an employee subject access request? Employers should recognise the request, which can be made verbally or in writing, confirm the person's identity if needed, make a reasonable and proportionate search and respond without undue delay and within one month. Complex requests can be extended by up to two months. A fee usually cannot be charged, and information about other people may need redacting.