One of the most experienced insolvency specialists in Sussex has questioned the Insolvency Service's current ability to investigate bankruptcy cases.

Chris Ashurst, a partner in the Brighton office of chartered accountants Mazars Neville Russell, responding to questions from the team conducting the service's five-yearly review, says: "The service undoubtedly has some staff who are skilled and effective in investigatory duties.

"My view, however, is that few examiners and short-term appointees have the time, or the appropriate skills, to carry out investigative duties. Indeed, the initial assessment of assets available in a case is often wildly inaccurate."

Mr Ashurst, a fellow of the Association of Business Recovery Professionals, a member of the Insolvency Practitioners Association and the Institute of Credit Management, who has been an authorised insolvency practioner since 1986, also takes issue with Trade and Industry Secretary Stephen Byers' simple division of bankrupts into "those who are honest, but unlucky or undercapitalised, and the reckless or fraudulent, who are described as the small minority".

According to Mr Ashurst a third group of bankrupts exists.

He says: "These people are not skilled and never will have the skills to run a business.

"They are responsible, in monetary terms, for a significant proportion of the losses borne by ordinary small business and other creditors. I believe there needs to be effective protection against this group as well as the dishonest and reckless."

Though he applauds the Government's desire to encourage entrepreneurs and responsible risk-takers, he says: "Risk-takers should be taking risks with their own money and that of informed, sophisticated banks and other institutions, not with the money of innocent customers and suppliers!"

While commending the service for taking proceedings against unfit directors of failed companies, Mr Ashurst criticises the service for its lack of vigour in preventing disqualified directors taking on other directorships.

On the other hand, Mr Ashurst goes on to say, there have been occasions when he has been "mystified" at decisions to proceed against individuals whom he has not reported for unfit conduct while no action was taken where there appeared to be clear grounds for doing so.

He said that if a radical approach to bankruptcy reform could be taken by Government and the business sector the service could play a more proactive role in the promotion of a successful entrepreneurial environment.

A spokesman for the service said: "We would be delighted to hear from Mr Ashurst about anyone fraudulently running a company."