Review by the Chief Executive and Inspector-General in Bankruptcy

Review by the Chief Executive and Inspector-General in Bankruptcy

It is my pleasure to present AFSA’s 2018–19 annual report. We’ve had another busy year, focused on ensuring the personal insolvency and personal property security systems operate in a fair and transparent manner that serves the different interests of those who use and rely on these systems.

We’ve continued to deliver strongly against our goals and towards achieving our purpose. This year, my review shares highlights from our focus areas, and identifies some of the risks and issues that emerged in 2018–19, and how we managed them. A more complete picture of our performance outcomes is provided in the report on performance.

My review in last year’s annual report noted our diverse—yet complementary—functions and activities, which support the administration of the Bankruptcy Act 1966 and the Personal Property Securities Act 2009 (PPS Act).

A key focus since I became Chief Executive has been to ensure that we continually question where we direct our efforts. This way, we make sure we use our resources effectively to manage risks that have the potential to undermine confidence in our systems, while building the organisational capabilities required for us to adapt to the changing needs of those who use our services.

Personal Property Securities Register

The Personal Property Securities Register (PPSR) helps to support financial risk management and economic activity. We continue to focus on building resources to help those who use and rely on the PPSR. An ongoing area of interest remains the small business sector, which continues to be challenged with many of the concepts the PPS Act introduced over seven years ago.

We have been employing a variety of different strategies to increase awareness of the PPS Act by working directly with trusted small business advisers—such as accountants—and by collaborating with other government organisations. These strategies have been effective in building awareness in a number of sectors; however, we recognise there is still much more to do. It is for this reason we initiated our first small business roundtable in December 2018, which provided a forum for small business champions and advocates to let us know the issues they are experiencing.

The key themes that emerged included a lack of awareness of the PPSR among the small business sector, the need for more support for small businesses to use the register effectively, the complexity of the legislation, its concepts and the register itself, and frustrations with the ability to enforce the security interest. These themes are amplified in regional communities, where there are often fewer resources available to support smaller businesses. To understand these issues better, we conducted a range of user research activities, including market research, behavioural economics studies, surveys and interviews with a range of small business users.

I would like to thank the small business owners who have given us their valuable time to share their experiences and insights into using the PPSR. This more direct engagement has been highly effective to help us increase our understanding of the pain points for small businesses, and test our ideas and concepts. It has also helped us to develop a range of new support tools and resources, which we will continue to deliver in 2019–20.

Another area of focus during 2018–19 has been implementing strategies to support the integrity of data held on the PPSR. This work recognises that for the PPSR to be an effective financial risk management tool in the economy, the data it holds must be highly reliable. We continue to work to limit clutter by ensuring those who use the register are discharging and amending registrations in a timely manner.

To support this work further, we launched a guide at the PPSR Stakeholder Forum in June 2019, designed to help users more effectively manage their registrations. We developed this guide in close collaboration with a cross-section of business stakeholders. We’re grateful for the generous way this group shared their ideas, which has made the guide a highly practical document for business users. It is also pleasing to see how well the guide has been received by the business community since its release, as demonstrated by the way it is currently being promoted by different stakeholder groups.

During 2018–19, we also continued to maintain a focus on areas of potential misuse of the PPSR and on enhancing its effectiveness as a consumer protection tool. We implemented some further controls to reduce the risk of people who have demonstrated a propensity to misuse the register from being able to make further registrations without additional oversight. We released a practice statement in December 2018 that explains one of these measures.

In addition, we continued to pursue enforcement action against people who undermine confidence in the PPSR. This includes referring matters to the Commonwealth Director of Public Prosecutions. I am acutely aware of how a very small number of users of the PPSR can cause significant frustration to individuals and businesses. For that reason, we will be investing additional time and resources during 2019–20 to increase our capacity to deal with those who seek to misuse the register to cause harm to others.

In the area of consumer protection, we were very pleased this year to have been able to use the PPSR to assist the Australian Competition and Consumer Commission to raise awareness about vehicles impacted by the Takata airbag recall. Since the launch of this service in September 2018, we have alerted over 220,000 PPSR users of a potential airbag risk. You can find further information about our work in this area in the case study on motor vehicle searches.


In last year’s annual report, I wrote about how the personal insolvency system is required to meet a number of objectives for a range of users and stakeholders. It has an economic imperative, but it is also an expression of social justice. We must be sensitive to the needs and expectations of users who are experiencing unmanageable debt, creditors who are owed money, and registered practitioners who work with both. We must also be mindful of the community’s expectations that the system is fair and one in which they can have confidence.

Due to the competing demands on the personal insolvency system, there is a necessary balance that needs to be struck to support confidence in the system. Too much emphasis on one user group or an aspect of the system at the expense of another part of the system can have a potentially negative impact. Getting the right balance between competing interests is what makes any system a fair one, including the personal insolvency system.

For AFSA, that means always striving to be a fair and firm regulator and a world-class government service delivery agency.

In my capacity as the Inspector-General in Bankruptcy, I maintain a responsibility to ensure the personal insolvency system operates in a compliant manner that serves the purposes of the Bankruptcy Act. The key to good regulation is to ensure that those you regulate not only understand what is required of them, but why what is required of them is important. This is why one of the key regulatory tools we continue to use is education.

When accompanied by processes and services that support compliant behaviour, education helps ensure people do not inadvertently fail to meet their obligations. This allows us to concentrate more direct forms of intervention, including enforcement activities, on those who intentionally seek to avoid their obligations. The net effect of this approach is that it reduces the regulatory burden on those who willingly comply, while increasing it on those who don’t.

The body of the report outlines a range of activities we have undertaken during 2018–19 to support confidence through our regulatory approach. Something we have been consulting on—and plan to publish during 2019–20—are our observations on the remuneration of registered practitioners in the personal insolvency system. We have drawn on a range of information and data at our disposal to prepare a report that we hope will be helpful to both practitioners and creditors.

Risk-based profiling is a key way of ensuring we direct our time and effort into addressing matters that are likely to cause the greatest harm to the system. This is supported by our data analytics capability. In 2018–19, we sought to expand our capability further by introducing compliance data into the datasets available for the annual GovHack event—an event that brings application developers and data providers together in competition to find innovative ways to use publicly released government data.

We were very impressed by the quality of participants, who used our data to produce tools we can use to support our regulatory work. We have since engaged the winner—the Insolvit team—to help operationalise the tool they developed at GovHack. This is a great outcome and shows how fundamental data analytics capability is to the operations of regulatory organisations. Read more about GovHack.

I also note, with some pride, that AFSA was the winner of the Best Government Participation – Australian Government award at GovHack 2018. This award recognises the hard work of a number of AFSA staff across the country.

While on the subject of staff achievements, I would like to acknowledge the success of AFSA’s Chief Economist and Statistician, River Paul. River was named the 2019 Telstra Australian Capital Territory (ACT) Business Woman of the Year, and the ACT winner in the Public Sector and Academia category.

AFSA holds a wealth of information on Australia’s personal insolvency and personal property securities systems. River’s leadership in managing the release of this information has built awareness and recognition of the value of this data both nationally and internationally. Her pioneering work in this space has led to a better understanding of how these systems support Australia’s credit infrastructure and help to deliver social outcomes. Government, the community and the private sector now use AFSA’s data to shape economic policies and programs, and make financial and business decisions. We release both personal insolvency and personal property securities data on a quarterly basis on our our website.

I want to acknowledge the important role registered trustees play in the operation of the insolvency system—particularly when there are bankrupts unwilling to cooperate or participate in the administration process. We have been working to support registered trustees by building their awareness of the Official Receiver powers they can access to improve bankrupt compliance. You can find further information about the sessions we conducted in 2018–19 and our success in this area.

AFSA remains focused on supporting people who rely on our services—particularly those experiencing financial hardship—to have access to the right information at the right time so they can make informed decisions about their options. We continued this work in 2018–19 by applying user-centred design principles, which have influenced not only how we explain information, but where we place it.

Given the wide variety of ways people now access information, positioning our information in the right place is important. We’ve entered a mutually beneficial partnership with MoneySmart at the Australian Securities and Investments Commission, enabling us to reach people in financial hardship at a much earlier stage. Reciprocally, the partnership has helped us to better serve those in financial distress by referring and promoting MoneySmart tools and resources that help build financial literacy skills.

A further initiative that we introduced during 2018–19 to support our service redesign agenda was the AFSAsandpit. This is a website that we use solely to test changes to information products and services prior to formal launch. I encourage you to visit the site and interact with it. Read more about the AFSAsandpit.

A majority of our simple transactional forms are now available online and we are in the process of streamlining the online process for applying for bankruptcy.

I look forward to talking about the benefits of that project in our next annual report. These are just some examples of the steps we are taking to make sure our services are contemporary and meet the needs of our different user groups.

In addition to the above initiatives, we expect to have fully implemented a cloud-based application to support the work we do through our National Service Centre by the end of 2019. This application positions us to be able to quickly adopt and deploy a wide variety of tools designed to support people contacting us via our existing channels, as well as enabling us to access and implement new channels based on user demand. As we harness the benefits of this new technology, I expect we will have more to report next year.

During the year, we worked to implement legislative changes for debt agreements. These reforms—which came into effect on 27 June 2019—saw changes in eligibility criteria to ensure the right people are accessing debt agreements, and gave us more powers to regulate debt agreement administrators. I would like to thank those impacted for your engagement and cooperation in ensuring a smooth transition to the new requirements.

International engagement

We continue to work closely with our counterparts in the international community. During the year, we participated in and presented at a number of overseas forums. We also had the pleasure of hosting officials from Malaysia and Indonesia, keen to learn about our systems and processes. Sharing information, ideas and trends with international organisations that have similar responsibilities to ours builds awareness of emerging harms that may affect the administration of the Bankruptcy Act and PPS Act. You can find further information about our international engagement.

Outlook for 2019–20

As we look to next year, I’m conscious it will come with some challenges that we need to navigate. The profile and volume of people entering into bankruptcy is changing, as are those entering other insolvency options such as debt agreements. This has implications for us, in terms of how we operate and the funding model that underpins our operations. We will need to address and manage these changes over the next few years and remain committed to working with stakeholders to ensure we continue to effectively support the personal insolvency and personal property securities systems.

In closing, I want to say that I’m very proud of our staff—they’re competent, capable and committed. We continue to implement initiatives under our People Strategy 2020, our workforce strategy to attract, retain and develop highly skilled, engaged and adaptable people. These initiatives ensure our people have the capabilities to achieve our strategic goals now and into the future.

Hamish McCormick
Chief Executive and Inspector-General in Bankruptcy

The year at a glance

July 2018

We launched our LinkedIn account—our first social media channel. This new channel complements our traditional communication channels and provides a new avenue for us to educate, communicate and connect with users all over the world.

August 2018

We participated in the Women in Insolvency and Restructuring Victoria networking event and panel discussion, to promote the importance of diversity and inclusion in the insolvency profession. Members of our Women@AFSA working group embraced the opportunity to support gender parity and establish networks in the industry—initiatives that have come from our Women@AFSA strategy, #IWILL.

September 2018

We raised funds to help the Indigenous Literacy Foundation improve literacy levels of children in remote Indigenous communities, and learned about the history of Melbourne’s Kulin peoples with a guided walking tour along the Yarra River with the Koorie Heritage Trust. Our participation in these events is a part of our ongoing dedication to reconciliation, and to building understanding, tolerance and respect in our workforce for the diversity and traditions of Aboriginal and Torres Strait Islander peoples—a focus of our Reconciliation Action Plan 2017–2020.

October 2018

Our Chief Executive and Inspector-General in Bankruptcy, Hamish McCormick, and our National Manager of Regulation and Enforcement, Paul Shaw, participated in the annual general meeting and conference of the International Association of Insolvency Regulators. We presented two sessions at the conference, one on trends and risks—such as ‘right option, the first time’, mental health, creditor disengagement, use of data, cryptocurrency and culture—and the other on the gender imbalance among insolvency practitioners.

November 2018 GovHack recognised our support of the 2018 hackathon, presenting AFSA with the award for Best Government Participation – Australian Government. Sponsoring GovHack gives us the opportunity to engage with the community, which helps build trust and awareness. It also shows the younger generation that there is interesting work in the public service to solve difficult problems for community benefit.
December 2018 We teamed up with insolvency industry partners to launch the Insolvency Mental Health Awareness Program—a series of mental health training programs for practitioners who support Australians impacted by insolvency. Developed in collaboration with the Australian Securities and Investments Commission, the Australian Restructuring Insolvency and Turnaround Association and Mental Health First Aid Australia, the new training program aims to provide insolvency practitioners with more skills and tools—and greater confidence—to identify and support people in vulnerable situations.
January 2019 We completed the first stage in our information and communications technology (ICT) infrastructure refresh project, with the rollout of new ‘behind the scenes’ hardware. This included the network and processing equipment in our server rooms. The infrastructure refresh project is designed to build capacity and capability in the ICT foundations we rely on to provide stable and reliable services to our users and stakeholders—now, and into the future.
February 2019 We commenced our new enterprise agreement—the AFSA Enterprise Agreement 2018—following its approval by the Fair Work Commission earlier in the month.
March 2019 Our Chief Economist and Statistician, River Paul, was named the 2019 Telstra Australian Capital Territory (ACT) Business Woman of the Year, as well as the ACT winner in the Public Sector and Academia category. River was recognised for her pioneering work managing the release of AFSA’s data, which government, the private sector and the community now use to shape economic policies and programs, and make financial and business decisions, delivering positive social outcomes.
April 2019 We launched Skype for Business video calls from desk to desk for our staff. The additional capability allows us to conduct virtual meetings from our desks, increasing collaboration across different locations, and reducing the need—and costs—of interstate travel.
May 2019 We opened up access to our online Personal Property Securities Register (PPSR) training and testing environment—Discovery—to everyone. The accessible Discovery environment encourages PPSR users to learn in a safe environment, and helps prevent redundant and defective registrations on the live system—preserving the integrity of PPSR data.
June 2019 We welcomed the commencement of amendments made by the Bankruptcy Amendment (Debt Agreement Reform) Act 2018. The reforms improve industry standards by setting enhanced registration and practice requirements, introducing tougher penalties for wrongdoing, and granting the Inspector-General in Bankruptcy additional investigative powers to address debt agreement administrator misconduct.

Agency overview


The Australian Financial Security Authority (AFSA) is a dynamic organisation that facilitates improved and equitable financial outcomes for consumers, business and the wider community through excellence in service delivery.


AFSA is an executive agency in the Attorney-General’s portfolio. We manage the application of bankruptcy and personal property securities laws through the delivery of high-quality personal insolvency and trustee services, personal property securities services, and through regulation and enforcement.

By delivering these services, and by providing regulation and enforcement, we create an environment in which businesses and the community can assess financial risk and make informed financial decisions. We also support the Australian economy by providing an orderly means to manage personal insolvency proceedings.

Insolvency and trustee services

We offer unique and specific expertise in personal insolvency and trustee services that the community, the business sector and government rely on.

Our strong industry experience in the administration of insolvent estates upholds the integrity of the personal insolvency system.

We deliver value to creditors by exercising our powers in a commercially sound way.

Our collaborative approach, depth of industry-specific knowledge and strong stakeholder relationships inform our trustee services.

Our expertise in personal insolvency and trustee services enables us to provide a range of comprehensive and integrated services. We:

  • act as trustee for personal insolvency administrations
  • act as trustee pursuant to court orders, particularly under the proceeds of crime legislation
  • act as special trustee for government
  • provide practical information about options to deal with unmanageable debt
  • preserve the security and integrity of a large volume of personal insolvency records through the operation of a national register.

Personal property securities

We use our expertise in combining industry knowledge, legal and financial acumen, technology and a client-centred approach to support the operation of the personal property securities system in Australia.

This expertise also enables us to deliver innovative solutions in response to the needs of our users and stakeholders.

Our working knowledge of personal property securities law and experience in making informed administrative decisions foster confidence in the personal property securities system and support financial risk management and access to finance within the economy.

Our skills in working collaboratively with private-sector service providers facilitate the development of market-driven and industry-specific software that streamlines business and community access and promotes efficiency, effectiveness and a high level of register usability.

Our data management expertise supports this work and strengthens the integrity of our data holdings.

Through our specific expertise in personal property securities, we deliver a range of services. We:

  • make administrative decisions to resolve disputes between secured parties and grantors
  • exercise discretion in response to applications made under the Personal Property Securities Act 2009 (PPS Act)
  • provide sector-specific information to assist users to effectively use the Personal Property Securities Register (PPSR)
  • preserve the security and integrity of a large volume of economically significant registration data
  • operate a national register of security interest for personal property.

Regulation and enforcement

We have significant expertise in regulation and enforcement of the personal insolvency and personal property securities systems, supported by our close, ongoing engagement with business and industry.

We are proactive in managing a wide variety of issues that have the potential to undermine public confidence in these systems.

By being proactive, we effectively respond to issues in a balanced manner and deliver our well-respected, risk-based practitioner inspection program.

We continue to review our regulatory practices and procedures in support of the government’s deregulation agenda and we have developed an AFSA Regulator Performance Framework.

In regulation and enforcement, our key roles are to:

  • regulate personal insolvency practitioners
  • investigate alleged Bankruptcy Act and PPS Act–related offences and, where appropriate, refer for prosecution.

This all combines to create an efficient and effective regulatory environment that preserves the integrity of the personal insolvency and personal property securities systems.


We are responsible for administering the following Acts, and associated regulations and rules, which provide a legislative framework for our functions and services:

  • the Bankruptcy Act 1966
  • the Bankruptcy (Estate Charges) Act 1997
  • the Personal Property Securities Act 2009.

We also administer property in accordance with orders made under the Proceeds of Crime Act 2002 and other Commonwealth legislation.

Administrations under the Bankruptcy Act are Part IV—bankruptcies, Part IX—debt agreements, Part X—personal insolvency agreements, and Part XI—deceased estates.


We fulfil each of the following roles created by the Bankruptcy Act:

  • Inspector-General in Bankruptcy—Our Chief Executive is also appointed as the Inspector-General in Bankruptcy. The Inspector-General is responsible for the general administration of the Bankruptcy Act and has powers to regulate bankruptcy trustees and debt agreement administrators, review decisions of trustees and investigate allegations of offences under the Bankruptcy Act.
  • Official Receiver—On behalf of the Official Receiver, we operate a public bankruptcy registry service with compliance and coercive powers to assist bankruptcy trustees to discharge their responsibilities.
  • Official Trustee in Bankruptcy—The Official Trustee in Bankruptcy, a body corporate created under the Bankruptcy Act, administers bankruptcies and other personal insolvency arrangements when a private trustee or other administrator is not appointed. We provide personnel and resources to ensure that the Official Trustee can fulfil its responsibilities. The Official Trustee also has responsibilities under the Proceeds of Crime Act 2002, the Proceeds of Crime Act 1987, the Mutual Assistance in Criminal Matters Act 1987, the Crimes Act 1914 and the Customs Act 1901 to control and deal with property under court orders made under those statutes.

The PPS Act creates the role of:

  • Registrar of Personal Property Securities—The Registrar maintains the PPSR in compliance with the PPS Act and associated regulations. This includes responsibility for ensuring that the register is operational and accessible. The Registrar has various powers in relation to the PPSR, such as refusing access to the PPSR or suspending its operation in certain circumstances; removing or reinstating data on the PPSR; and conducting investigations into matters for the purpose of performing his or her functions.

Our service users

We have a broad range of people and organisations who use our services and information, including:

  • those who owe money and are considering, or currently using, one of the options provided by the Bankruptcy Act
  • those who are owed money and who are considering taking action against a debtor or who are currently involved in a bankruptcy case
  • people who transact on the PPSR, such as finance providers, businesses, consumers, legal practitioners, accountants, business advisers and government agencies
  • practitioners and industry professionals, such as registered trustees, registered debt agreement administrators, financial counsellors, accountants and legal practitioners.

Our stakeholders

Our service delivery is informed and supported by close engagement with our stakeholders, including other government agencies, professional associations, and industry and peak bodies, and through our international relationships.

We consider better practice through close engagement with key service delivery partners and international associations.

Locally, we work with agencies including the Australian Securities and Investments Commission, law enforcement agencies, the Commonwealth Director of Public Prosecutions, the Federal Circuit Court and the Federal Court. The professional associations we work with include Financial Counselling Australia, the Australian Restructuring Insolvency and Turnaround Association, the Personal Insolvency Professionals Association and the Association of Independent Insolvency Practitioners.

We work closely with the New Zealand Ministry of Business, Innovation and Employment under a memorandum of understanding. By building this and other international relationships, we support regional development, inform better practice and facilitate cross-border enforcement.

Organisational structure

Our senior executive is led by the Chief Executive, who is directly assisted by the:

  • Deputy Chief Executive and Chief Operating Officer
  • National Manager, Client Services
  • Chief Information Officer
  • Chief Finance Officer and National Manager, Finance, People and Capability
  • National Manager, Insolvency and Trustee Services
  • National Manager, Regulation and Enforcement
  • General Counsel, Legal and Governance.

Our Chief Executive, Hamish McCormick, was AFSA’s accountable authority throughout 2018–19.

The areas of responsibility of our senior executive are shown in Figure 1.

Figure 1: Senior executive, at 30 June 2019

Groups and divisions

The Chief Operating Officer Group coordinates and delivers key services, including executive support, communications, financial management, information and communications technology (ICT), human resource management, security, contract and property management, and client contact services. The group has three divisions:

  • The Client Services division provides a range of services including statistics, stakeholder communication and engagement, and frontline service delivery for insolvency and PPSR enquiries, information and transactions. It works to streamline services through process innovation, informed by the needs of our users. It also provides enterprise, parliamentary and strategic support across the organisation.
  • The ICT Services division delivers and supports business-enabling technology solutions and services for staff and users. Insolvency services, proceeds of crime and the PPSR systems comprise our main technology solutions, along with a range of corporate applications, a business intelligence capability, and support services for the Client Services and Regulation and Enforcement divisions. The division’s other responsibilities include delivering and managing robust infrastructure platforms, providing help desk services and strategic technical advice, and delivering an enterprise architecture capability.
  • The Finance, People and Capability division ensures our current and future financial sustainability and manages our workforce through our strategic direction for human capital management, learning and development programs, recruitment processes and employee relations. The division is also responsible for the management of AFSA’s property, security and corporate support.

The Insolvency and Trustee Services division provides information to debtors on options to deal with unmanageable debt, and assesses and registers bankruptcy, debt agreement and personal insolvency agreement applications from debtors and registered court-ordered insolvency administrations. It issues bankruptcy notices on the application of creditors, and exercises the statutory powers of the Official Receiver to obtain information and recover monies on the application of trustees administering insolvent estates.

The division also maintains the National Personal Insolvency Index, and handles pre-bankruptcy, most post-bankruptcy and general enquiries. In addition, it ensures that debt agreement proposals comply with the law and conducts the voting process with creditors in relation to debt agreements.

Insolvency and Trustee Services also conducts preliminary enquiries that identify matters to be investigated for recovery of assets and possible offences. As the Official Trustee, it acts as special trustee for government agencies pursuant to court orders and administers personal insolvencies where no registered trustee has been appointed.

The Regulation and Enforcement division operates independently of other functional roles, discharging the regulatory and review responsibilities of the Inspector-General in Bankruptcy under the Bankruptcy Act. The enforcement function is responsible for investigating all alleged offences under the Bankruptcy Act and PPSR-related offences, and prepares briefs for prosecution by the Commonwealth Director of Public Prosecutions.

The Legal and Governance division provides legal advice and support to all areas of our operations. In addition to providing specialist advice on bankruptcy, personal property securities and proceeds of crime legislation, the division advises on administrative law, contracts and other matters relevant to our corporate governance. The division also supports agency assurance through administration of the internal audit, corporate quality, information governance, and business continuity functions.

Outcome and program structure

Figure 2 shows our outcome and program structure for the reporting period, as contained in our Portfolio Budget Statements 2018–19.

Figure 2: Outcome and program structure, 2018–19