Insolvency compliance program 2018–19

1.Overarching ethos

We endeavour to foster stakeholder confidence in the personal insolvency system through effective regulation and enforcement activities that are timely, consistent and appropriate.

1.1 Statements of principle

Our regulatory approach focuses on early resolution of systemic issues by adopting a proactive and preventive approach wherever possible.

The Inspector-General Practice Statement 1 – Regulatory framework (IGPS 1) outlines the core of AFSA’s regulatory ethos.

IGPS 1 and our compliance program are flexible, and continuously under review in line with market conditions affecting stakeholders.

1.2 Whole of industry approach and international best practice focus

AFSA promotes a regulatory environment where all stakeholders play a part in maintaining best practice standards.

We will continue to engage with:

  • financial counsellors
  • creditors
  • debtors
  • the Commonwealth Director of Public Prosecutions (CDPP)
  • Australian Restructuring Insolvency and Turnaround Association (ARITA)
  • Personal Insolvency Professionals Association (PIPA)
  • Australian Securities and Investments Commission (ASIC)
  • other professional associations and government agencies.

This broad level of engagement ensures all necessary intelligence is available and facilitates the best outcomes for those affected by insolvency.

AFSA will also continue to actively engage with the International Association of Insolvency Regulators (IAIR) to facilitate appropriate benchmarking against developments and advances in insolvency regimes in comparable jurisdictions.

2. Strategic focus areas in 2018–19

In the financial year to 30 June 2019, we will focus on the following eight areas in our compliance program. These areas have been identified following an assessment of relevant regulatory issues and consultation with the profession.

2.1 Law reform—practical implementation

  • Subject to enactment by Parliament, ensure practitioner's compliance with changes implemented by the one year bankruptcy bill and debt agreement reforms.
  • Ensure quality and efficient administration in the first 12 months of a bankrupt estate particularly with respect to the proper use of objections to discharge.
  • Ensure all affected parties are aware of changes implemented by the one-year bankruptcy bill and debt agreement reforms.

2.2 Certifications in debt agreements

Verify that a registered debt agreement administrator is satisfactorily performing their duty to certify debt agreement proposals, particularly in the areas of affordability and disclosure.

2.3 Practitioners business systems and controls

Ensure that all practitioners have sound and up to date business systems and controls that aid the efficient undertaking of their duties.

2.4 Remuneration and expenses

Identify and investigate, through own initiative and using information from complaints and other sources, Inspector-General reviews of remuneration, potential cases of overcharging or over-servicing.

Investigate the process of collecting set up fees prior to submitting debt agreement proposals to ensure conformance with the spirit of the legislation and relevant guidelines including PIPA's Code of Professional Practice.

2.5 Delays in administration

Ensure efficient and effective administration particularly with respect to aged matters.

2.6 ‘Right option—first time’

Ensure that information and advice provided by practitioners is accurate, relevant and comprehensible for the recipient, thereby enabling informed decisions to be made by debtors and creditors.

2.7 Untrustworthy advisors

Using all available data and intelligence, we will focus on taking enforcement action (proactive and reactive) to disrupt untrustworthy advisor conduct that has the potential to undermine confidence in the personal insolvency system. We will focus on compliance with the trustee performance standards and the ARITA and PIPA Codes of Professional Practice to ensure practitioners remain independent, including with pre-insolvency advisors.

2.8 Debt agreements—offences

We will analyse debt agreement termination and variation trends and where appropriate investigate alleged offences of the Bankruptcy Act and refer matters to the CDPP for consideration of prosecution action.   

Contact

If you have any queries on a matter referred to in this program, please contact us on 1300 364 785 or email regulations.allocations [at] afsa.gov.au.