The issues identified by the Financial Services Royal Commission demonstrate how culture can impact behaviour within a system.
A decade ago, at the IPA National Conference, Robert Sanderson, Past President of INSOL International, launched what we now know as the ARITA Code of Professional Practice. He said:
It is global societies’ increasing expectations of professionals that they will do the right thing for the right reason and this expectation has never been higher. It is no longer globally acceptable for insolvency professionals who have lost sight of the intent of the legislation, and who try to fit around the rules, to say they "followed the rules”.
Ten years later and Sanderson’s words have never been more apt.
As I reflect on the public reaction to the royal commission it is clear that an ethical culture is best maintained when everyone plays their part.
Insolvency practitioners are a key part of our system. They exercise a high level of commercial and professional judgement and are required to deal with distressed parties, competing demands, strict deadlines and complicated legal and financial issues. As a result, they come under scrutiny from a wide range of stakeholders, including regulators, government agencies and the courts.
But confidence in the personal insolvency system doesn’t rest on practitioners alone.
Bankrupts and creditors, as well as those who have dealings with these groups, also have a responsibility to call out behaviour that can affect the integrity of the system. Fraudulent behaviour is one area AFSA obviously maintains a very close interest in.
By its very nature, fraud involves deceptive conduct. Those who successfully exploit their privileged positions are often plausible, charming and highly adept at concealing their wrong-doing. This means that, despite AFSA’s best monitoring and intelligence gathering activities, fraud is not easy to uncover early without the assistance of others.
It takes the vigilance of the whole community to detect fraud and protect the trust that the public places in the personal insolvency system.
Everyone has a role to play
Whether you are an insolvency practitioner, creditor, bankrupt or just someone who has observed suspected misconduct by one of these groups, you can play a part in supporting the integrity of the personal insolvency system by:
- Speaking up about suspected fraud early—and reporting it. Take an interest in the behaviour of those you come into contact with. Watch what people do, not what they say. Speak up early and report concerns to AFSA.
Play an active part by working with us to protect the public and the industry’s reputation. Inform us of any activity that raises concerns.
Deputy Chief Executive, Chief Operating Officer
and Registrar of Personal Property Securities