Bad advice costs UK microbusinesses £6.4 billion a year » SMEInsider

Bad advice costs UK microbusinesses £6.4 billion a year

Direct Line for Business has found that one in six (320,000) small and microbusinesses in the UK have suffered from poor professional advice from consultants, resulting in £6.4bn worth of damage to enterprises in the past 12 months.

Britain’s small and micro businesses have on average suffered £20,842 worth of damage in the past 12 months due to being given bad advice. Nearly 20 per cent of small businesses have experienced losses of between £50,000 and £100,000.

Accountants and property advisers are just two areas in which SMEs have suffered bad advice from. These so called ‘professionals’ could be pursued for losses incurred as a result of giving substandard advice.

Take a look at this graph that ranks the sectors that incur the most damage to SME’s through improper consultancy.

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‘‘Our research clearly highlights the devastating effect poor professional advice can have on small and micro businesses,’’ stated Nick Breton, head of Direct Line for Business.

‘‘However the impact on an advisory firm that is facing litigation can be just as shattering. For those providing advisory services, it is important to recognise that issues can occur and clients could pursue them for compensation.’’

‘‘Advisory firms can protect themselves in case an issue does arise from the advice they give by taking out professional indemnity insurance.’’