Inspector-General Practice Direction 22

Inspector-General Practice Direction (IGPD) 22 - Effective practitioner communication

1. Introduction

1.1 An analysis of the findings of AFSA's regulatory annual inspection programme and complaints data since 2007–2008 reveals that the most frequent practitioner breach of duty surrounds a lack of communication and provision of information or action in a timely manner. This typically involves practitioners not responding to bankrupts’, debtors’ or creditors’ reasonable requests for information and not paying dividends in a timely manner.

1.2 The purpose of this practice direction is to outline the Inspector-General in Bankruptcy’s expectations in regard to the obligations of trustees, controlling trustees and debt agreement administrators (RDAAs) to effectively communicate with bankrupts, creditors, debtors and other stakeholders as outlined in the Bankruptcy Act 1966 (the Act), the Bankruptcy Regulations 1996 (the Regulations), the Insolvency Practice Rules (Bankruptcy) 2016 (“the Rules”)  and the profession’s Codes of Professional Conduct.

1.3 It is the practitioner’s responsibility, under the regulatory environment overseen by the Inspector-General, to decrease the level of inspection errors and justified complaints in relation to practitioner communication so that bankrupts, debtors and creditors receive the most efficient service possible and best practice standards are promoted.

2. The legislative framework

2.1 The Act, Regulations and Rules set out the minimum requirements for trustees and administrators to communicate with stakeholders. See Annexure A for a summary of the more material minimum standards trustees and RDAAs need to meet when communicating with stakeholders.

2.2 Practitioners are encouraged to use Annexure A as a guide to ensure that the legislative framework is adhered to throughout the course of an administration. It should also be noted that this is not an exhaustive list and does not replace the application of practitioner discretion to meet a higher standard on a case by case basis when required.

2.3 The Standard on communication contained in the Rules at 42-15 reflects the obligations set out in the Codes of Professional Conduct and states:

42‑15  Communication

             (1)  Communications by a registered trustee must be:

                     (a)  clear and concise and, where appropriate, expressed in lay terms; and

                     (b)  objective; and

                     (c)  responsive; and

                     (d)  timely; and

                     (e)  expressed in a professionally courteous tone and manner.

             (2)  A registered trustee must take care to ensure that all communications, including reports (whether issued personally or by delegation) are accurate and do not omit or obscure information required to be included or relevant to users of the communication.

             (3)  A registered trustee must preserve confidential information where necessary, unless disclosure of such information is required by law.

3. Code of professional conduct

3.1. In addition to the statutory references, the Australian Restructuring Insolvency & Turnaround Association (ARITA) and Personal Insolvency Professionals Association (PIPA) Codes of Professional Practice stipulate a mandatory framework to which it is expected their members adhere. The Accounting Professional and Ethical Standards Board’s Standard on Insolvency Services, APES 330 is another professional code that applies.

3.2 All Codes are highly commended to practitioners as appropriate guidance on communications and for use in the induction and ongoing training of their staff.

Australian Restructuring Insolvency & Turnaround Association (ARITA)

3.3 The ARITA position is that its members must comply with the provisions of the ARITA Code.

3.4 Two relevant and communication related principles of practitioner conduct are reinforced in the ARITA Code.

Principle 4 - 'Members must communicate with affected parties in a manner that is accurate, honest, open, clear, succinct and timely to ensure effective understanding of the processes and their rights and obligations.'

Principle 5 -'Members must attend to their duties in a timely way.'

3.5 These principles are the subject of extensive guidance; Communication Chapter 8 and Timeliness Chapter 9.

3.6 Chapter 8 of the ARITA Code states:

'Effective communication in insolvency is essential..'

It requires communications from members to:

  • be clear, concise and written where possible in lay terms
  • avoid jargon
  • be objective, responsive, timely
  • be expressed in a professionally courteous tone and manner.

3.7 In Chapter 8 the ARITA Code states:

'The timely reply by the Practitioner to inquiries from creditors and debtors will assist in diffusing animosity and concern that they are not being heard.'

3.8 At the same time, Chapter 8 of the ARITA Code requires practitioners to carefully exercise their professional judgment in balancing the needs of individuals for information or for responses to their inquiries with the overall efficiency and costs of the administration.

Communicating with an overly demanding creditor or bankrupt may need to be limited in order to avoid excessive remuneration accumulating to the disadvantage of all creditors. Similarly, in providing information in a report, the ARITA Code says that a practitioner should ensure, where possible, that the level of information in the report is proportionate to the size and complexity of the administration.

3.9 In Chapter 9 the ARITA Code emphasises the need to minimise negative emotion stating:

'Insolvency is stressful and traumatic for those involved. Prompt, clear and courteous communications and replies to queries all reduce angst and improve trust in the Practitioner. Many complaints have their origin in the sense of the complainant being ignored rather than in technical or substantive acts or omissions of the Practitioner.'

Personal Insolvency Professionals Association (PIPA)

3.10 The PIPA position is that its code does not supersede the law and applies to all members in the administration of debt agreements.

3.11 Chapter 6 of the PIPA Code indicates that effective communication is essential due to the complexity of the insolvency process and the degrees of experience of stakeholders.

3.12. Consistent with the ARITA Code, PIPA recommends that communication from members is:

  • clear, concise and written in lay terms
  • objective; responsive; timely
  • given in a professionally courteous tone and manner.

4. The stakeholders

4.1 The four stakeholders most relevant to and reliant on effective practitioner communication are bankrupts, debtors, creditors and AFSA (representing the Inspector-General and the Official Receiver).


4.2 In the vast majority of cases, bankrupts and debtors will be new to the insolvency process and will most likely never be subject to the provisions of the Act again. For this reason it is very important that communication is clear and concise.

4.3 Bankrupts and debtors may be non-responsive for a variety of reasons. This represents a significant challenge for the practitioner in ensuring the education of the bankrupt or debtor throughout the insolvency process and outlining the consequences for failing to respond. At the same time, the practitioner may need to take action if the bankrupt or debtor delays or does not co-operate. The ARITA Code recognises that communicating with bankrupts and others may require firm and forthright communication, particularly in situations where there is a refusal to co-operate, and belligerence, or where examinations or litigation are involved.

4.4. Practitioners need to also be aware of the rights of bankrupts and debtors to obtain certain information. Subsection 170(2) of the Act (Equivalent section for RDAAs is s185LA(b) of the Act) provides:

'The trustee shall, at the request of the bankrupt, furnish to the bankrupt information reasonably required by the bankrupt concerning his or her property or affairs.'

However bankrupts and debtors do not have an unrestricted right to obtain information from the practitioner – a request needs to be reasonable Haskins v Official Trustee in Bankruptcy [2000] FCA 691.

4.5 What is a reasonable request? This needs to be determined on a case by case basis and at the discretion of the practitioner. A request for information by a bankrupt concerning investigations that the trustee is pursuing would not be a reasonable request: Dudley v White [2009] FMCA 1329. In certain circumstances unreasonable failure to supply information could lead to disciplinary action. The trustee’s discretionary decision is also appealable under section 178 of the Act.

4.6 While the Court can order a trustee to provide information to a bankrupt the Inspector-General (or a delegate) does not have this power: Haskins v Official Trustee in Bankruptcy [2000] FCA 691.


4.7 Like bankrupts and debtors, creditors may also be new to the insolvency process. Creditors may want to achieve an outcome or receive a dividend in a shorter time frame than is reasonably practical. Again this represents a challenge for the practitioner in educating creditors and keeping them regularly informed of progress in the administration.

4.8 Practitioners need to acknowledge a creditor’s right to have access to the accounts and records of the administration and their right to make reasonable requests for information. (Sections 173, 19(1)(d) and 185LA of the Act

4.9 Rule 42-130 (of the Standards) requires that a trustee must consider the views of creditors in relation to whether moneys held by the trustee should be applied to conduct further investigations or be distributed as a dividend. As creditors are the ultimate beneficiaries in the estate their views must be sought by the trustee.

Australian Financial Security Authority (AFSA)

4.11 It is imperative that practitioners and AFSA keep open lines of communication.

4.12 The Official Receiver maintains the National Personal Insolvency Index (NPII) and is reliant on practitioners to file information in accordance with statutory time-frames as detailed in the table at this link. This table is a useful tool as it is indexed by stakeholder and legislative requirement as well as detailing the penalties for late lodgement.

4.13 The Inspector-General monitors the practice standards of practitioners and expects a prompt response to all reasonable requests for information.

4.14 In return, AFSA must respond to practitioners in a manner consistent with the service standards set out in AFSA's Client Service Charter.


4.15 It is of paramount importance that all stakeholder groups maintain open and effective communication.

4.16 Communication problems can often be the result of an expectation gap between what the bankrupt, debtor and creditors think a practitioner should do or has the power to do and what the practitioner does not have the power to do. This highlights the importance of clearly defining roles and managing expectations early.

4.17 It is expected practitioners will, in appropriate circumstances, exercise patience and care and utilise the relevant provisions of the Act (for example, objections to discharge and section 139ZL notices) to ensure bankrupts, debtors and creditors aid the smooth administration of an estate while also providing guidance and advice as appropriate.

4.18 The ongoing challenge for practitioners is to balance the competing interests of bankrupts, debtors and creditors by adhering to their duty to act honestly and impartially, as required by the Standards.

5. The goals of effective communication

5.1 Effective communication can greatly reduce costs and increase returns to creditors. Having sound practices in place will greatly assist the achievement of the following goals.

Transfer of knowledge

5.2 Reliable and accurate information is transferred both to and from the practitioner.

Knowledge management and education

5.3 Information is readily available for those that reasonably require it.

5.4 Some practitioners are making information available through password enabled access to their firm's website. Not only does this save time and costs for the administration (e.g. copying and postage) but it also encourages creditors, bankrupts and debtors to become self-sufficient in accessing the answers they need.

Promotion of industry best practice

5.5 Effective communication allows the Official Receiver to maintain an accurate and up to date NPII and to collate important statistical information.

5.6 It also allows the Inspector-General to monitor the industry in order to identify areas for improvement. For example, effective communication practices limit the likelihood of complaints being escalated to the Inspector-General and a practitioner receiving infringement notices such as in cases where documents are filed late with the Official Receiver.

Easy to understand

5.7 Effective communication tailors the message to the reader and avoids the use of jargon, acronyms and overly technical insolvency terms wherever possible.

5.8 An analysis of practitioner complaints received and investigated by AFSA Regulation and Enforcement reveals that while many are not justified in terms of a breach of the legislation, many people still feel the need to complain. This may often be because the complainant is being given information either verbally or in writing that is accurate but simply not what they want to hear. Nevertheless it can also be associated with unclear explanations given by the practitioner or a lack of care and patience being afforded in particular to those in financially vulnerable situations.

6. Communication mediums

6.1 Practitioners play a key role in educating bankrupts, debtors and creditors to better understand the insolvency process.

6.2 Practitioners have the choice of different types of communication mediums, many of which are outlined in Regulation 16.01:

  • telephone
  • mail
  • facsimile
  • teleconference
  • meeting or interview (whether formal or informal)
  • email
  • website including FAQs, A-Z index material and information kits including fact sheets on the AFSA website
  • online.

6.3 The communication medium adopted by the practitioner should be in line with the needs of the stakeholder. It is reasonable to expect that a practitioner will engage with bankrupts, debtors and creditors using a medium that is convenient and effective. For example, an elderly couple with little knowledge of technology may be unlikely to benefit or understand web based or on-line communication. Should the elderly couple only wish to receive communication by mail through the post, practitioners may promote the benefits of electronic communication but if the stakeholder is insistent, their wishes should be respected.

6.4 Information and communications technology (ICT) is transforming the way business operates and the pace of change will only increase. ICT advances can provide better service delivery, while at the same time improving efficiency and reducing practitioner’s costs. Effectively using ICT to achieve this goal is a significant challenge.

6.5  As can be seen at Australian internet growth and Population Statistics , as at December 2015, 93.1 per cent of the Australian population have internet or computer access compared to 33.8 per cent in 2000.

6.6 Practitioners should aim to put the stakeholder first with a seamless delivery of services. The table showed in the link quick comparison of insolvency options is a good example of practical and effective communication.

6.7 A cost effective communication medium that takes advantage of web based technology is the AFSA introduced website for advertising meetings of creditors. See AFSA website - advertising for meetings of creditors. This website serves the dual purpose of providing a more cost effective alternative for creditors meeting advertising than newspaper advertising and offering a database that is readily searchable.

7. Quality assurance and risk management

7.1 It is expected that practitioners will be aware of the major risks associated with having an ineffective communication framework and the controls that may be put in place to mitigate their occurrence.

Quality assurance and risk management: risk and control





High, vulnerable and negative emotions slowing progress in an estate.

Monthly or quarterly quality assurance reviews.


Practitioner breach of duty leading to an infringement notice (IGPS 18 Appendix A) or disciplinary action

Checklists, templates, precedents etc.


Loss to the estate (e.g. asset recovery) for failing to act

Peer reviews, mentoring


Effect on reputation, credibility

Training including induction


Effect on ongoing capability to be registered to practice

Information sheets including those available on the AFSA website.


Complaints to R&E or to the court adding costs to the estate

Professional judgement and experience

Note: A control can help to mitigate more than one risk. There is no direct correlation between each of the six controls and risks shown above.

7.2 It is also expected that practitioners will take these risks and controls into account when building and reviewing their practice's Management Assurance Framework and quality assurance programmes.

8. Inspector-General expectations

8.1 Practitioners may sometimes perceive a creditor or bankrupt/debtor query to be:

  1. unreasonable and/or
  2. not an influencing factor in realising assets in order to speed up the finalisation of an administration and/or
  3. not a high priority in the context of the other duties they have in relation to an administration.

8.2 These are all valid reasons why the practitioner may defer or limit a response to the request. But given that bankrupts/debtors and creditors are the primary stakeholders in personal insolvency administration it is expected that all reasonable queries be duly respected, given an appropriate level of priority and answered promptly.

8.3 All communication should be timely, fair, effective and readily understood. AFSA supports the position on communication adopted by the ARITA and PIPA.

8.4 AFSA Regulation and Enforcement Inspectors, as part of their annual inspection, will check that the provisions of the Act and the principles stated in this practice direction are followed.

8.5 AFSA recommends insolvency practitioners include in their communication (where appropriate) a simple sentence and/or website link to inform stakeholders of the availability of additional information particular to their circumstance. An example would be:

'For additional information, creditors, debtors and interested stakeholders can refer to AFSA's website'

8.6 It is accepted that there may be some individuals who will continue to make complaints irrespective of the quality of the practitioner’s communication framework. This practice direction highlights the importance of the practitioner obligation to guide stakeholders to receive accurate information that is readily accessible where appropriate, easy to understand and to ensure the legislative framework is complied with.

9. Conclusion

9.1 This practice direction outlines the Inspector-General’s expectations with regard to an insolvency practitioner’s obligations to effectively communicate with debtors, bankrupts, creditors and other stakeholders in the insolvency process. This practice direction and the legislative framework will form the basis of how an insolvency practitioner’s performance of these obligations will be assessed by Regulation and Enforcement.

Annexure A - Communication legislative framework

Annexure A  - Communication legislative framework

Duty, obligation or standard required

Trustees' legislative authority

RDAAs' legislative authority

Duty to notify and report to creditors in a timely way

ss19(1)(a) & (c)

s190A(1)(a) & s189A

Regulation 4.14

s185LB – 3 months arrears default

Duty to give information to creditors who reasonably request it




Duty to furnish/give information to a bankrupt/debtor who reasonably requires/requests it



Duty to allow creditors to inspect administration records



Provide prescribed information and inform the bankrupt/debtor of their obligations under the Act and penalties for failure to comply with those obligations

Rules 42-10 & 42-30(a)

Regulation 4.11

Regulation 10.02 s188(2AA)

Regulation 9.01

s185C(2D)(b) s185E(1)



Guidelines, clauses

2.7.10 to 2.7.11

Timely and interim distribution of estate funds … “with all convenient speed” and “without needlessly protracting the trusteeship.”

ss140 & 145

Rules 42-135 & 140 Regs 8.12A, B & C


Guidelines, clause 1.5.2




Filing documents with AFSA – i.e. the Inspector-General and the Official Receiver.

Regulations - Schedule 8

Official Receiver Filing times