Inspector-General Practice Direction 22

IGPD 22 - Effective practitioner communication
Last updated: 
1 April 2021

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1. Introduction

1.1 AFSA's annual Personal Insolvency Practitioners Compliance Reports reveal that one of the most frequent practitioner breaches of duty surrounds:

  • a lack of communication and provision of information; or
  • a lack of action in a timely manner.

This typically involves trustees, controlling trustees and debt agreement administrators (‘practitioners’) not responding to reasonable requests for information by bankrupts, debtors or creditors and not paying dividends in a timely manner.

1.2 The purpose of this practice direction is to outline the expectations of the Inspector-General in Bankruptcy (‘the Inspector-General’) in regard to the obligations of practitioners to effectively communicate with bankrupts, debtors, creditors and other stakeholders as outlined in the:

1.3 Practitioners are responsible, under the regulatory environment overseen by the Inspector-General, for decreasing the level of inspection errors and justified complaints in relation to their 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 (including the Schedule), 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 debt agreement administrators 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 Standards on communication in section 42-15 of the Rules reflects the obligations set out in professional codes and standards 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 practice

3.1. In addition to the statutory references, the Australian Restructuring Insolvency and Turnaround Association (ARITA) and Personal Insolvency Professionals Association (PIPA) each have a Code of Professional Practice (‘Code’) stipulating a mandatory framework to which their members must adhere. The Accounting Professional and Ethical Standards Board (APESB) Standard on Insolvency Services APES 330  also applies to practitioners who are members of CPA Australia (CPAA), Chartered Accountants Australia and New Zealand (CAANZ) or the Institute of Public Accountants (IPA).

3.2 The ARITA and PIPA Codes and APESB Standard 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 their 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. Section 70-56 of the Schedule to the Act requires a trustee to comply with a request from a bankrupt or debtor to give them information, provide a report or product a document unless it is not relevant to, or would breach the trustee’s duties in, administering their estate or is otherwise not reasonable. A similar provision applies to debt agreement administrators under paragraph 185LA(b) of the Act.


4.5 Like bankrupts and debtors, creditors (or a committee of inspection) also have rights to obtain certain information. Sections 70-40, 70-45 and 80-40 of the Schedule to the Act requires a trustee to comply with a request from creditors (by resolution), an individual creditor or a committee of inspection, respectively, for information, a report or document unless it:

  • is not relevant to the administration of the estate
  • would breach the trustee’s duties in relation to the administration of the estate
  • is otherwise not reasonable.

4.6 Creditors may also be new to the insolvency process and 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.

4.7 Practitioners also need to acknowledge a creditor’s right to have access to books of the administration: A trustee must allow a creditor (or their agent) to inspect books of the administration, including those related to carrying on any business, at all reasonable times under paragraphs 70-10(2)(b) and 70-11(1)(b) of the Schedule to the Act. A trustee who fails to allow access to administration books without reasonable excuse commits an offence of strict liability with a penalty of 5 penalty units1.

4.8 Section 42-130 of the Rules 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.

1 Subsections 70-10(4) and 70-11(2) of the Schedule to the Act. Also see Inspector-General Practice Direction (IGPD) 5 – Trustees' guidelines relating to handling funds and keeping records.


4.9 The Commonwealth may request the trustee of a bankrupt/debtor to provide specified information, reports or documents in relation to the administration of the estate if either2:

  • a former employee of the bankrupt/debtor has made a claim from the Commonwealth for financial assistance from the Commonwealth for unpaid employee entitlements; or
  • the Commonwealth considers that such a claim is likely to be made.

4.10 The trustee must comply with such a request. However, the Commonwealth must bear the cost of providing the information, report or document if the trustee considers that is insufficient property available to comply with the request3.

2 Section 70-55 of the Schedule to the Act.

3 Section 70-55 of the Rules.

Unreasonable requests

4.11 The rights of a bankrupt/debtor or creditor to obtain certain information from a practitioner must be reasonable. It is unreasonable for a trustee to comply with a request from a bankrupt/debtor4 or creditor(s)5 for information, a report or document if:

            (a)  it would substantially prejudice the interests of one or more creditors or a third party and that prejudice outweighs the benefits of complying with the request

            (b)  it would be privileged from production in legal proceedings on the ground of legal professional privilege

            (c)  disclosure would found an action by a person for breach of confidence

            (d)  there is not sufficient available property to comply with the request

            (e)  it has already been provided

            (f)  it is required to be provided under the Act (including Regulations) within 20 business days of the request being made

            (g)  the request is vexatious.

4.12 If it is unreasonable to comply with a request for information or a report or document, the trustee must notify the person or body making the request that it is not reasonable, why that is the case and make a written record of this in the books of the administration6.    

4.13. It is reasonable for a trustee to comply with a request for information or a report or document if the factors in a) to g) in paragraph 4.11 do not apply. Even if factors d), e) or f) apply it is still reasonable for the trustee to comply with such a request if:

  • the bankrupt/debtor or creditor(s) agree to bear the cost of complying with the request; and
  • security for the cost is given to the trustee (if required) before the request is complied with.  

Time to comply with reasonable requests

4.14 If a reasonable request is made for information or a report or document, the trustee must comply within 5 business days after receiving the request or such later period as agreed with the person or body making the request.  

4.15 The trustee may extend the period for complying with the request by giving written notice, if reasonably satisfied that it is required due to the nature of the request7. The notice must:

  • be given to the person or body making the request
  • specify the period within which the request will be complied with; and
  • specify the reasons for the extension8.

Inspector-General direction to comply with reasonable requests

4.16 If a trustee refuses a reasonable request for information or a report or document, the Inspector-General may direct him or her in writing to give all or part of the relevant material to the person(s) who made the request within 5 business days after the direction is given9.

4.17 Before giving such a direction, the Inspector-General will give the trustee notice in writing:

  • stating that the Inspector-General proposes to give the trustee a direction
  • identifying all or part of the relevant material and person(s) to whom it is proposed to be given
  • inviting the trustee to make a written submission within 10 business days after the notice is given stating any objection to the proposed direction the reasons10.

4.18 The Inspector-General will not give a direction to a trustee to give the relevant material if satisfied that the trustee was entitled not to comply with the request by the person under a provision of the Act (or any other law)11.

Court order to give relevant material

4.18 A bankrupt/debtor, creditor or committee of inspection who made the request for information, a report or document may apply to the Court for an order that the trustee give them all or part of the relevant material12.

4.19 The Inspector-General may also apply to the Court for an order that the trustee comply with a direction given provide according to paragraph 4.16 above.

4.20 On application by a bankrupt/debtor, creditor or committee of inspection (subsection 70-90(1) of the Schedule to the Act) or the Inspector-General (subsection 70-90(2) of the Schedule to the Act), the Court may:

  • order the trustee to give the person(s) who made the request all or part of that material; and
  • make such other orders, including orders as to costs, as it thinks fit.

4 Subsection 70-17(2) of the Rules.

5 Subsections 70-15(2) and 70-10(2) of the Rules for an individual creditor and creditors (by resolution) respectively.

6 Subsection 70-5(2) of the Rules.

7 Subsection 70-1(3) of the Rules.

8 Subsection 70-1(4) of the Rules.

9 Section 70-70 of the Schedule to the Act.

10 Section 70-75 of the Schedule to the Act.

11 Section 70-80 of the Schedule to the Act.

12 Subsection 70-90(1)of the Schedule to the Act.

Australian Financial Security Authority (AFSA)

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

4.22 The Official Receiver maintains the National Personal Insolvency Index (NPII) and is reliant on practitioners complying with statutory filing requirements available on the AFSA website. This table is a useful tool as it is indexed by stakeholder and legislative requirement as well as detailing the penalties for late lodgement.

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

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


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

4.26 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.

4.27 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.

4.28 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 Enforcement and Practitioner Supervision 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 section 102 of the Regulations:

  • 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.

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

8.2 AFSA Enforcement and Practitioner Supervision Inspectors, as part of their compliance activities, will check that the provisions of the Act and the principles stated in this practice direction are followed.

8.3 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

8.4 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 Enforcement and Practitioner Supervision.

Annexure A - Communication legislative framework

Annexure A - Communication legislative framework

Duty, obligation or standard required


Debt agreement administrators

Duty to notify and report to creditors in a timely way

Paragraph 19(1)(a) and (c) of the Act

Paragraph 190A(a) and subsection 189A(1) of the Act

Section 70-30 of the Rules

Subsection 185LB(1) of the Act – 3 months arrears default

Duty to give information, provide a report or produce documents to creditors who make a reasonable request

Sections 70-40 and 70-45 of the Schedule to the Act

Sections 70-10 and 70-15 of the Rules

Paragraph 190A (b) of the Act

Paragraph 185LA(c) of the Act

Duty to give information, provide a report or produce documents to a bankrupt/debtor who makes a reasonable request

Section 70-56 of the Schedule to the Act

Section 70-17 of the Rules

Paragraph 185LA(b) of the Act

Duty to allow creditors to inspect administration books

Paragraph 70-10(2)(b) and 70-11(1)(b) of the Schedule to the Act



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

Section 42-10 and 42-30(a) of the Rules

Section 59 of the Regulations Subsection 188(2AA) of the Act

Section 54 of the Regulations

Paragraph 185C(2D)(b) and subsection 185E(1) of the Act

Clauses 2.7.10 to 2.7.11 of the Guidelines

Dealing with estate funds or property of the bankrupt/debtor in an appropriate and timely manner

Sections 140 and 145 of the Act

Section 42-135 and 140 of the Rules

Paragraph 185LA(a) of the Act

Clause 1.5.2 of the Guidelines

Duty to give notice or a report to bankrupt/debtor and creditors about remuneration 

Sections 70-35, 70-45 and 70-47 of the Rules


Filing documents with/giving information to Official Receiver or Inspector-General.


Section 19B of the Act

Part 13 Division 2 of the Regulations



Official Receiver filing times