Enforcement against harmful conduct
Australian Financial Security Authority (AFSA) supports a strong credit system for the Australian community. We ensure confidence in Australia's personal insolvency and personal property securities systems and manage proceeds of crime.
Our annual Regulatory Action Statement outlines how we will address misuse of Australia’s credit system, an enduring priority for AFSA. In 2024-25, we will focus our resources on addressing conduct resulting in the areas of significant harm listed below.
We will achieve this through the full use of our regulatory toolkit of education, compliance, investigation and enforcement, and use remedies available to us such as:
- cautions
- infringement notices
- civil litigation, including civil penalties
- criminal case referrals
- conditions on registration
- suspension or revocation of practitioner registration.
2024–25 focus areas
Harm caused by practices and advice that result in disadvantage
Inappropriate, deficient or incomplete practices and advice can cause significant financial harm to individuals. Such practices and advice may also harm the interests of creditors by keeping assets in the hands of debtors and ensuring only certain creditors receive benefits.
Examples of conduct of concern to AFSA include:
- charging excessive or unnecessary fees
- delaying access to personal insolvency options due to the charging of upfront fees
- administration of debt agreements and personal insolvency agreements resulting in financial or other harm to creditors and debtors
- encouraging individuals to register information on the Personal Property Securities Register which could expose them to identity theft or other harms.
Harm caused to individuals experiencing hardship
We are aware many members of the community are experiencing hardship, be it due to cost-of-living pressures or personal circumstances. We are committed to addressing the significant financial and personal impact resulting from these harms.
Examples of conduct of concern to AFSA include:
- abusive financial and coercive control of individuals within domestic and family relationships through misuse of Australia's credit system, including the Personal Property Securities Register
- failure to inform debtors of options to mitigate hardship
- failure by financial institutions to end registrations on the Personal Property Securities Register in a timely manner.
Harm caused by fraudulent practices
We are committed to taking action to deter fraudulent practices, which remain of great concern to AFSA.
An example of conduct of concern to AFSA is engaging in activities with the intent to defraud creditors, including debtors and others advising debtors to make false declarations in Statements of Affairs or unlawfully dispose of assets.
Summary of outcomes against the 2023–24 Regulatory Action Statement
We achieved a number of significant outcomes in support of our 2023–24 Regulatory Action Statement (PDF 848 KB):
- Enforcement and court outcomes, including:
- referring offences against the Bankruptcy Act 1966 to the Commonwealth Director of Public Prosecutions, resulting in convictions against 6 individuals, and imprisonment against 5 individuals, for disposing of property within 12 months of filing for bankruptcy
- securing a favourable court outcome against an individual who was found by the Federal Court to have made false registrations on the Personal Property Securities Register
- deregistering a trustee following their failure to maintain mandatory insurance cover. This deregistration has led to broader investigations into related entities to ascertain the full extent of alleged wrongdoing.
- imposing strict audit conditions on registered debt agreement administrator, A&M Group Pty Ltd, trading as Debt Negotiators
- contribution to a Federal Court case which confirmed the Inspector General in Bankruptcy's approach regarding treatment of capital gains tax in bankruptcy by trustees
- commencing multiple investigations for alleged non-compliance with and offences against legislation AFSA enforces, including into circumstances surrounding the personal insolvency of debtor Beau Hartnett.
- Addressing harms caused by untrustworthy advice, including by:
- referring matters regarding untrustworthy advice to the Australian Securities & Investments Commission
- deepening our understanding people's experiences with pre-insolvency advisors through a survey
- commencing a review of the debt arrangements and debt management firm landscape, including to identify potential harms to vulnerable consumers
- engaging with key stakeholders regarding harms caused by untrustworthy advice, including through presentations with co-regulators.
- Strengthening AFSA's organisational structure and culture following recommendations from the AFSA Regulatory Review 2024, including establishing:
- a Regulatory Committee with the role and purpose of serving as a strategic advisory body to AFSA on the management of the risk relating to compliance, enforcement and litigation
- a dedicated Education & Outreach team to strengthen our educational material and reach
- a dedicated Operational Analytics & Intelligence team to further embed our intelligence-led culture.