Remuneration in the personal insolvency system

As the personal insolvency regulator, AFSA maintains a close interest in practitioner remuneration.

This is an area that, if not appropriately managed, has the potential to undermine confidence and trust in the personal insolvency system.

Ensuring the insolvency system supports fair outcomes is a key measure of our success. We do this by making sure that the system operates in a highly transparent and fair way to protect creditor and debtor interests.

Over the last year there has been a lot of discussion – across the finance industry – about insolvency practitioner remuneration. Trustee remuneration has also been a reoccurring theme in AFSA’s annual Compliance Program.

Evidence from complaints, review requests and AFSA’s own inspection and compliance work suggests that the remuneration process does not always operate efficiently and effectively, which is why we’ve recently undertaken a number of new initiatives to address concerns on remuneration.

Reviewing remuneration

In 2019 we conducted a review on remuneration to gain a deeper understanding of the practices used by registered trustees to set and charge fees. Last November we shared the draft Remuneration report on the AFSAsandpit. Thank you to all who provided feedback. Your input provided great insight and assisted in shaping the finalised report.

I am pleased to announce the release of our first in-depth market report Registered trustee remuneration in the personal insolvency system. This report outlines our findings and recommendations for registered trustees, creditors and debtors. It is designed to educate people about existing processes and provide guidance on best practice principles.

Key findings

As part of our research we examined the complaints AFSA receives about trustee remuneration and costs. The number of complaints regarding remuneration was in fact quite low – only 10%. However, further analysis of the data suggests that the overall level of dissatisfaction may be much higher – applications to AFSA to approve remuneration have more than doubled since 2015 and an increasing number of creditors are abstaining from voting.

Pleasingly, the report did not uncover systemic issues, but it did identify some instances of poor practice, which include:

  • remuneration being well in excess of the liabilities that caused the bankruptcy
  • over-servicing
  • unnecessary delays in annulling the estate
  • excessive numbers of staff involved in the administration, adding layers of charge
  • work carried out at too senior a level given the nature of the task
  • unnecessary or excessive travel
  • excessive time charged for preparing what should be standard correspondence
  • remuneration being drawn after an annulment.


To help address these issues, we’ve set out a number of best practice recommendations and guidance for registered trustees.

Recommendations are also specific to both creditors and debtors, as they too have an important role to play in ensuring this market is as effective and efficient as possible.

It is important that registered trustees do their best to help both creditors and debtors make informed decisions. Where possible, registered trustees should clearly set out expected costs and explain the reasons where certain work must be completed.

AFSA will monitor industry practice against our recommendations and identify any potential cases of over-charging or over servicing administrations. This enables us to take appropriate regulatory or disciplinary action.

I encourage you to review it and ensure that your own processes and procedures are consistent with the high standards displayed by the vast majority of registered trustees supporting Australia’s personal insolvency system.

Hamish McCormick

Chief Executive and Inspector-General in Bankruptcy

Australian Financial Security Authority