A message from our Chief Executive
Many people enter the systems regulated by AFSA having experienced significant vulnerability.
Every day, around 30 people enter into a personal insolvency option. Half have debts of less than $50,000, held across unsecured debts like credit cards and buy now pay later arrangements.
Meanwhile, creditors face losses on money, products or services extended in good faith.
As a regulator, we must provide a strong and balanced approach that allows people in financial distress to get a fresh start, while providing a remedy for those who are owed money.
To make sure we live up to being a visible, modern, and contemporary regulator, we must increase our understanding of vulnerability and the many complex factors that contribute to it.
We respond to people's unique circumstances, to help them navigate the personal insolvency and personal property securities systems and connect them to the services they need. We must ensure our processes do not create harm, increase barriers, or cause unnecessary stress.
We must consider the financial counsellors and insolvency practitioners engaging with people experiencing financial hardship as part of their day-to-day job.
This strategy addresses vulnerability through a broad lens, with tangible initiatives and objectives to allow people to engage fairly with our systems.
In preparing this strategy, AFSA has consulted widely to ensure our approach is informed by people who work with vulnerability every day.
I'd like to thank everybody who contributed to this strategy. Your input, which reflects people's lived experiences, brings substance to our response.
Tim Beresford
Chief Executive
Inspector-General in Bankruptcy
Vulnerability – An enduring priority
AFSA's vision is: A strong credit system for the Australian community.
The Australian Financial Security Authority (AFSA) is responsible for Australia's personal insolvency and personal property securities systems, as well as managing criminal assets. Our regulatory work encourages the flow of credit in the economy and effective engagement with the personal property securities register (PPSR).
The bell-curve model
The bell-curve model (figure 1) represents our approach to managing risk. Most harms that undermine an effective credit system occur in the outer edges of the bell curve, where people either experience barriers or circumstances that require increased support, or deliberately misuse the system.
Supporting strategies and policy
The AFSA Vulnerability Strategy 2025–28 sets out a 3-year approach to vulnerability as an enduring strategic priority. This complements other strategies, policies and projects that seek to address harms in our regulatory systems.
AFSA Regulatory Strategy
We support individuals at risk of, or experiencing, vulnerability or disadvantage using available data to tailor information to at-risk users, informing them of options and where to access support. We ensure our practices protect information that may place people at risk of harm. We prioritise work to support First Nations people through collaboration with the community and their support networks.
AFSA Compliance and Enforcement Policy
We adopt a harms-based approach to regulation, using our regulatory tools for the purpose of correcting non-compliance and preventing and reducing actual and potential harms. Harms can be financial or non-financial, including harm to individuals' health and safety, harm which exacerbates individuals' vulnerability, and harm to the integrity of Australia's credit system.
AFSA Regulatory Action Statement
We target our activities to address the most serious, significant and systemic harms. We consider the circumstances in which the conduct and harm occurred, and the most effective way to prevent and remedy harm and ensure future compliance. This is achieved by using the full range of our regulatory toolkit; education, compliance, investigation and enforcement.
Operating context
People experiencing vulnerability in our regulatory systems
AFSA acknowledges that a broad range of people can experience vulnerability in our regulatory systems, including:
- people with debt, including small business owners
- creditors
- practitioners
- users of the PPSR.
Economic and social environment
As Australia's economic and social environments change, we must:
- consider the future of the credit, personal insolvency and personal property securities systems
- assess the impacts that changes have on the people interacting with our regulatory systems
- take a holistic approach and continuously adapt our practices to meet the evolving needs of the Australian economy and community.
Regulatory environment
AFSA regulates the personal insolvency and personal property securities systems to ensure a balanced and fair experience in line with regulatory obligations.
Guided by the Regulatory Strategy 2023–27, our focus is to identify and support people experiencing vulnerability or disadvantage. We also take action against those who cause harm within our regulated systems.
As a regulator, we cannot provide tailored advice to individuals, however we can refer people to appropriate services that can provide support. This includes specialist services for First Nations people and people with culturally and linguistically diverse backgrounds.
Personal insolvency
The personal insolvency system provides a clear and consistent way for people to address unmanageable debt while providing a remedy for those who are owed money.
PPSR
The PPSR is a publicly accessible register where people can:
- register an interest over an asset
- search assets they intend to buy to check if they have a registered interest over them.
Users of the PPSR may experience vulnerability if personal property security interests are unfairly or falsely registered. The impacts of this behaviour can cause harm and limit future credit options for a person by:
- registering an interest over an asset that the person registering does not have a valid security interest in
- not removing registered interests in a reasonable timeframe
- selling a vehicle or asset with a registered interest before meeting obligations of a contract.
Administrative environment
AFSA effectively and efficiently manages and disposes of criminal assets under the Proceeds of Crime Act 2002 (Cth). The Proceeds of Crime Act 2002 (Cth) allows proceeds of crime to be confiscated, forfeited to the Commonwealth and then used to benefit the Australian community.
AFSA works in partnership with the Australian Federal Police and other key agencies to support the Australian Government in disrupting and dismantling organised crime. AFSA's role in managing and disposing of criminal assets is different to administering estates in the personal insolvency system.
We acknowledge that innocent third parties, including individuals and businesses, may be impacted by these processes. AFSA applies the principles of this strategy to support innocent parties experiencing vulnerability when they are impacted by the criminal asset confiscation scheme.
Understanding vulnerability
Defining vulnerability
AFSA considers a person experiencing vulnerability as someone whose situation or circumstances could leave them open to harm, exploitation, or other detriment, if they don't receive the right information or support to understand their options, engage with us, or to meet their regulatory obligations.
A person may:
- experience more than one type of vulnerability (at once or over their lifetime)
- experience temporary or permanent circumstances occurring at any time
- be functionally impacted on a physical, mental, or emotional level
- be impacted by actions of the credit market – including barriers to accessing information
- be negatively imacted the actions of untrustworthy advisors.
Risk factors
Vulnerability impacts everyone differently and people are not inherently vulnerable – they experience vulnerability due to their circumstances. Some factors that may increase risk of vulnerability include:
- age
- health conditions or illness
- disability
- cultural and language barriers
- employment status
- literacy
- abuse (including family and domestic violence, coercive control and elder abuse)
- trauma (including life events, natural disasters, intergenerational trauma, and unemployment).
Vulnerability impact
Anyone can experience vulnerability. The effects of vulnerability aren't always obvious, and some people may not feel comfortable sharing how their situation affects their daily life.
People experience and respond differently to vulnerability. One or more of the above factors may act as a barrier to a person's ability to:
- obtain information about their options
- engage with AFSA's processes and systems
- and/or work toward compliance with their regulatory obligations.
Our response to vulnerability
In these circumstances we can consider if there are appropriate actions that can be taken to support fair and balanced outcomes.
The actions we will consider taking will vary in relation to each individual's circumstances and support requirements.
Action may include providing:
- referral information for a broad range of community support services
- responses in writing or verbally
- flexibility on time frames where permissible under legislation.
Guiding principles
Our approach to identifying and responding to vulnerability is guided by 4 principles. We will:
- take a human-centred and trauma-informed approach to better understand the experiences, needs and requirements of people interacting with AFSA systems
- listen to our stakeholders so we can take a collaborative and multidisciplinary approach to support people experiencing vulnerability
- use data and insights to identify vulnerability and address system harm using inclusive design principles
- take accountability at all levels to continue to improve how we identify and respond to vulnerability.
These principles act as guardrails to help AFSA:
- improve the accessibility of the information we provide
- develop appropriate support measures for people experiencing vulnerable circumstances
- uplift our vulnerability awareness and capability
- embed a vulnerability culture within our business processes and systems
- model the behaviours we expect practitioners to use when engaging with people experiencing vulnerability.
Strategic objectives
The Vulnerability Strategy focuses on 4 key objectives:
- AFSA supports people engaging with the personal insolvency and PPS systems to understand their options and meet their regulatory obligations.
- AFSA's vulnerability approach and capability is embedded in our practices.
- AFSA's regulatory community is guided to identify and support people experiencing vulnerability.
- AFSA is an intelligence-led regulator that uses data and insights to understand and respond to vulnerability.
These objectives will guide our engagement with individuals and small businesses with unmanageable debt, creditors, practitioners and users of the PPSR system.
They focus on supporting people who interact with AFSA's systems to understand their options, make informed decisions with autonomy, reduce barriers and prevent additional harm to people who may already be experiencing difficult circumstances.
This includes building the vulnerability capability and culture of AFSA's staff and the regulated community to identify and respond to vulnerability while meeting legislative obligations. Objective AFSA supports people engaging with the personal insolvency and PPS systems to understand their options and meet their regulatory obligations.
AFSA supports people engaging with the personal insolvency and PPS systems to understand their options and meet their regulatory obligations.
Current state
AFSA recognises that the personal insolvency system and PPSR can be difficult to navigate. It can be challenging to make informed decisions under financial distress and making a bad decision can lead to poor outcomes and not meeting compliance obligations.
Future state
People with debt, creditors, practitioners, and users of the PPSR to have the information they need to navigate our systems, make informed decisions and achieve compliance with their personal insolvency or PPS regulatory obligations.
We will achieve this by:
- regularly engaging with key stakeholders
- using clear, consistent plain language – applying a vulnerability by design approach
- enhancing the accessibility, navigation, and content relevance of our websites.
AFSA's vulnerability approach and capability is embedded in our practices.
Current state
AFSA treats vulnerability as a series of tasks rather than making support a core part of our culture and staff capabilities.
Staff do not have clear and consistent guidance, information, and processes to support people experiencing vulnerability.
Future state
Our systems and processes are fair, consistently and effectively applied, ensuring that barriers and harms are identified and addressed. Our people are supported to respond appropriately through a vulnerability lens while maintaining legislative compliance in their decision making.
We will achieve this by:
- training our staff to recognise and respond to vulnerability in a way that identifies the impact of trauma and focuses on supporting the person's strengths to assist their decision making
- offering appropriate and timely referrals to support services for people experiencing vulnerable circumstances
- designing our processes with vulnerability in mind to reduce barriers
- ensuring our approach to addressing identified vulnerability is consistent, applicable and measurable
- having a clear understanding of what is possible within our legislative framework to support people experiencing vulnerable circumstances.
AFSA's regulatory community is guided to identify and support people experiencing vulnerability.
Current state
AFSA's regulatory community (including practitioners and financial counsellors) has some understanding about how people experiencing vulnerability may find it challenging to interact with our regulatory systems.
AFSA's stakeholders have requested further support and education to improve their understanding and tools to respond to vulnerability.
Future state
AFSA supports our regulated community to embed vulnerability awareness and capability into their training and processes.
We guide practitioners to identify and respond to vulnerability while also protecting themselves from risks of exposure and vicarious trauma.
We will achieve this by:
- providing guidance to its regulated community on how to identify and respond to vulnerability in the personal insolvency and PPS systems
- ensuring our regulated community is aware of free support services available to practitioners who may be experiencing vulnerability
- demonstrating model trustee behaviour when interacting with people experiencing vulnerability within the personal insolvency system.
AFSA is an intelligence-led regulator that uses data and insights to understand and respond to vulnerability.
Current state
AFSA needs to better understand how people experiencing vulnerability are impacted by disadvantage, hardship and barriers in our regulatory systems to help us take targeted action and to inform resourcing decisions.
Future state
AFSA draws insights on vulnerability from various sources and jurisdictions. We build awareness and understanding of vulnerability across government and industry.
AFSA is an intelligence-led regulator proactively monitoring and developing our systems through a vulnerability lens to identify and prevent harm in our regulatory environment.
We will achieve this by:
- capturing user insights and lived experience to understand and target barriers and harms in our systems
- using operational data as an evidence base to identify and address harm
- sharing system vulnerability insights with other government agencies and departments.
How we will get there
Actions we will take
We will take action to achieve the objectives through sequenced, measurable initiatives. These actions will be delivered in a deliberate and intentional manner that aligns with the planning and prioritisation of enterprise activities and resourcing.
Accountability and reporting
AFSA will ensure accountability for delivering the Vulnerability Strategy through internal and external reporting. We will report our progress externally through the Consumer Consultative Panel and our Annual Report.