AFSA’s focus areas for 2020-21 revealed in Personal Insolvency Compliance Program

The Australian Financial Security Authority (AFSA) has today released the Personal Insolvency Compliance Program 2020-21.

Each year, after considering trends and current issues in the personal insolvency system, AFSA establishes and publishes a compliance program that sets out the key areas of focus for the year ahead. These focus areas highlight the issues that AFSA believes are most likely to undermine trust and confidence in Australia’s personal insolvency system.

In 2020-21, AFSA has highlighted five key focus areas:

  • Supporting and protecting the financially vulnerable
  • Ensuring fair pay for necessary work undertaken by insolvency practitioners
  • Promoting professional conduct and competence
  • Enforcing consequences for non-compliance
  • Encouraging everyone to play their part in supporting the regulation of insolvency in Australia.

AFSA’s Chief Executive and the Inspector-General in Bankruptcy, Hamish McCormick, highlighted the importance to AFSA of considering all available data when deciding the focus areas for the year ahead.

“These focus areas have been identified following an evaluation of the information and data available to AFSA, as well as through consultation with insolvency professionals,” Mr McCormick said.

“Not surprisingly, a reoccurring theme for this year’s compliance program is the impact of the COVID-19 crisis. Each of the focus areas has been analysed through the lens of the current economic conditions.

“AFSA is committed to ensuring that the COVID-19 crisis is not seen as an opportunity for misconduct within the personal insolvency system. We will be monitoring the behaviour of debtors, creditors and insolvency professionals to ensure that all parties are acting appropriately given the circumstances.

“We are also committed to supporting and protecting financially vulnerable Australians, many of whom may be entering the personal insolvency system for the first time.”

Mr McCormick explained that everyone has a role to play in supporting the regulation of the personal insolvency system.

“Overwhelmingly we find that debtors, creditors and insolvency professionals are committed to doing the right thing,” Mr McCormick said.

“However there are some, particularly on the fringes, that look to misuse the system for personal gain. 

“While AFSA has a strong regulatory function, we are simply unable to identify all misconduct without the assistance of others.

“A key aspect of this year’s compliance program is highlighting the important role that others play in AFSA’s regulation of the system.

“By working collaboratively with both the insolvency profession, stakeholders and other regulators, we will be best placed to tackle the risks and potential harms of the year ahead.”

The Personal Insolvency Compliance Program 2020-21 is available on the AFSA website.