AFSA Chief Executive speech at the 2025 AIIP conference

Introduction

Good morning. It’s a pleasure to be with you today, addressing the annual conference of the Association of Independent Insolvency Practitioners.

I wish to acknowledge the Ngunnawal and Ngambri (Kamberri) people as the traditional custodians of the land on which we meet and pay my respects to Elders past and present. 

As I speak to you today, the Australian Government is receiving its final submissions on priority reforms to consider as part of the upcoming Economic Reform Roundtable in August. 

As a regulator, I give a lot of thought to our role in that reform. 

How do we ensure the systems we regulate operate most effectively, so people can engage with them with trust and confidence? 

How can we – and I mean all of us, as a sector – contribute to improving productivity and lifting Australia’s economic and social wellbeing? 

And how do we do this in an environment of eroding public trust in governments, professions and businesses? 

I believe it comes down to three things. 

First and foremost – culture. Culture matters. Good culture builds trust. Poor culture destroys it.

Foundation elements of culture are: 

• Purpose – deeply knowing your reason for being, ‘the north star’’.
• Values – knowing what is good, or worth choosing.
• Principles – knowing what is right, what you would be proud to see the light of day. 

They complement each other.

I’ll talk about some of the things we’ve been doing to reinforce a strong culture across the personal insolvency sector. 

Secondly, currency. Our regulatory approach must be relevant to the current environment. 

Our approach must address what we’re seeing on the personal insolvency landscape – and evolve as circumstances change. 

I’m using this forum today to launch our Regulatory Action Statement for 2025-26. 

It outlines the key harms we see in the year ahead and how we plan to tackle them. 

And thirdly, community. The personal insolvency system must reflect the community we serve. This is one of the ways the profession further builds and reinforces trust. 

That means, for example, increasing diversity within the profession and I’ll address the initiatives we’re taking there. 

These are the three things I’ll focus on today – culture, currency, community. 

Why culture matters

Let me start first with culture. 

For people and businesses to engage confidently with the systems we regulate, they need to know they can trust the professionals they interact with. 

That includes lawyers, registered liquidators and registered trustees like yourselves, or financial counsellors, advisers and, indeed, my own staff at AFSA. 

According to the 25^th edition of the Edelman Trust Barometer, it’s harder than ever to build that trust. 

Over the past 25 years, Edelman has tracked a pattern of eroding public trust in governments, professions and businesses. 

And according to the latest edition, that mistrust has turned to grievance. 

In Australia, 62% of respondents have a moderate or high sense of grievance, believing government, professions and business make their lives harder.    

As a result, they disengage. They’re less optimistic about the future.

As Edelman warns, this places the social contract at risk. And when that happens, instability, unrest and conflict ensues.   

I frequently reference a speech Lieutenant General David Morrison gave to his Australian troops in 2013, in which he said: 

“The standard you walk past is the standard you accept.”   

In almost every speech I make – whatever the audience – I highlight our shared responsibility to uphold the integrity of Australia’s credit system, so people can engage with it with confidence. 

At AFSA, we believe the system works best when we all work together.   

That’s why I expect industry participants like yourselves to model the highest standards and work with us to stamp out misconduct.   

If you see something wrong, say something. Don’t walk past it. Don’t let it be the standard you accept. 

You can refer matters to us or report a tip-off using an online form on our website, by calling us or sending us a letter. And you can do it anonymously if you choose.   

It’s not just the right thing to do. There are important business imperatives to demonstrating a social licence to operate, as noted by the Edelman Trust Barometer.   

I look at the fall in personal insolvencies after the Hayne Royal Commission in 2017. 

Commissioner Hayne called on banks and financial institutions to take a good look at the way they interacted with their customers. Really examine their purpose, values and principles. And they did. 

With that cultural realignment, creditors started actively engaging with people in financial difficulty. 

Instead of pushing them into insolvency, they worked together on solutions. 

The results are stark. Personal insolvencies have more than halved since then, from around 30,000 a year to just over 12,000. This is a social and economic good. 

A fundamental reason for that drop was a change in culture. Changed creditor behaviour has been a critical factor in the decline in personal insolvencies. 

This is the kind of difference positive culture drives – when clear purpose, values and principles are embodied in your systems, processes and policies. 

And while this decline obviously impacts the industry you work in, it in no way lessens the importance of what you do for people and businesses moving through the insolvency process, both those who have debt and creditors.

That’s why we have such a strong focus on culture in our regulatory oversight. 

Some of you in this room have had a visit from myself and Neville Matthew, the National Manager of our Education, Surveillance and Enforcement team. 

You will appreciate that our interest lies not just in the technical aspects of your operations and knowledge of the Bankruptcy Act but also your culture. Your systems, processes and policies. 

Here are some of the elements we see as proxies for a positive culture: 

• complaints and whistleblower policies on your website that are written in plain English, easy to understand and championed by the senior leadership of the firm.
• an induction package that lets new employees know that if they see something they don’t understand or they don’t think is appropriate, they can raise it without repercussions, even if their concerns are unfounded.
• a privacy policy that spells out simply what you do with people’s data. 

We also look at what’s in the public domain – such as reviews on Google, Seek and Glass Door – about what it’s like to work at or interact with your organisation. 

In the interests of keeping our regulated community informed about our expectations of you, we’re developing an active engagement strategy for Tier 1 and 2 practitioner visits in 2025-26. 

As a part of our inspection program in 2025-26, we’ll be specific about what we want from you, in terms of your systems, processes and policies – and demonstrating good cultural practices.

We will work on the basis of ‘show me’, don’t ‘tell me’. 

I can also assure you that the Official Trustee, as a Tier 1 trustee, is also subject to the same scrutiny and the same searching questions. 

I plan to hold the Official Trustee to the same high standards we expect from registered trustees and registered debt agreement administrators. 

In a nutshell, the insolvency system operates most effectively if we all follow the highest professional standards, clear processes, well-understood policies and effective systems. 

With us all achieving this, the system will only require a light regulatory touch – as we ALL will be following ethical standards of behaviour. 

In other words, if we all ‘swim between the flags’, there will be very little need for regulatory intervention. 

Currency – ensuring our regulatory approach is relevant

I come now to the second key requirement for ensuring the fair and effective operation of the systems we regulate – currency. 

Our regulatory approach must be relevant to the current environment. 

We must be alert to the changes we’re seeing on the personal insolvency landscape – and address emerging harms so they don’t undermine confidence in the system. 

This is what our Regulatory Action Statement, which I’m releasing today, is about. 

It identifies the key harms we’re targeting in the year ahead and the measures we’re taking to address them. 

This is our third annual Regulatory Action Statement and an important way for us to communicate our expectations to our regulated community. 

This year, we’re targeting 4 key harms. 

The first one is: Manipulating personal insolvency proposals and creditor meetings to protect wealth.  

Here, we’re focused on personal insolvency agreements we consider unreasonable, offering a low return to creditors. 

The decision in the recent Hartnett matter suggests this scrutiny is warranted – and I talk a little about that matter later. 

In some instances, debtors appoint a ‘friendly’ controlling trustee, expecting the trustee to do their bidding instead of maintaining professional balance. 

They might expect the trustee to issue a favourable report recommending creditors accept the debtor’s proposal. 

Or they might want the trustee to manipulate meeting outcomes so the debtor can avoid bankruptcy and protect their assets. 

In other instances, debtors have created false creditors. 

They ask family, friends and associates to lodge bogus proof of debt claims, so they can stack creditor meetings and vote up proposals offering a low return to genuine creditors. 

One matter we’re looking at now involves a proposal to extinguish over $120 million worth of debt for about $100,000. It simply doesn’t stack up.

These actions are classic examples of system misuse, in many cases facilitated – knowingly or otherwise – by practitioners.  

The community has every right to expect more from the profession.

And while some tell us it’s a case of one or two bad apples in the system, the evidence we’re seeing suggests otherwise. 

So, we’re acting on multiple fronts to disrupt the misuse of personal insolvency agreements. 

We’re increasing our capacity to intervene – and intervene more directly. 

We’re exercising our statutory power to attend – and participate in – creditor meetings where we have genuine concerns. 

In creditor meetings, we’re using opening statements to outline our expectations, the responsibilities of debtors and other parties, and the penalty for failing to comply, which is imprisonment. 

We’re making greater use of the tools in our regulatory toolkit. 

The Hartnett matter was the first time we had made such an application to the court under the Bankruptcy Act. 

In February, the Federal Court set aside the personal insolvency agreement protecting Gold Coast lawyer Beau Hartnett from bankruptcy. 

This followed our concerns that the terms of the agreement were unreasonable or not in the interests of creditors. 

This year, for the first time, we have used the Inspector-General’s powers to conduct coercive examinations of people in the insolvency industry. 

And we’re also building our capacity to manage the problems we’re finding. 

A Trustee Taskforce has been set up to focus on serious practitioner misconduct. 

The misuse of personal insolvency agreements not only disadvantages creditors.

In matters where one of those creditors is the Australian Tax Office and government revenue is compromised, it impacts the wider Australian public. 

So, we’re speaking to creditors about engaging more in the personal insolvency process, rather than simply writing off their losses as bad debts. 

We’re establishing a much closer relationship with the ATO and exploring options, such as where we can partner with each other to have a personal insolvency agreement overturned. 

The second key harm we’re targeting is: Unauthorised access to trust funds for personal gain. 

This has taken on currency in the wake of the Leroy matter, in which we deregistered trustee Paul Leroy 13 days after his employer reported allegations of misconduct to us.  

As practitioners, you all understand your legal obligation to act in the best interest of creditors and debtors. 

Appropriately managing trust accounts is an important part of this fiduciary duty. In fact, it’s one of the most important. 

Yet, we see a range of behaviours, in which practitioners: 

• pay themselves fees from trust accounts prior to receiving client authority,
• mix trust accounts and business accounts to cover business expenses, or
• siphon monies held on trust into personal accounts. 

And we see other acts of fraudulent or deliberate misappropriation of funds for personal benefit. 

So, I’m putting the practitioner community on notice today that we’ll be looking at this more closely over the coming year. 

It will be a feature of our practitioner visits and a significant aspect of our cultural oversight. 

We’ll look for sound systems, processes and procedures and regular reconciliation of ledgers.  

We’ll scrutinise Annual Administration Returns and remuneration determinations for evidence of potential non-compliance.

And we’ll refer matters involving serious practitioner fraud to police for criminal offences. 

Our oversight won’t just focus on those who directly mismanage accounts.

We’re also interested in instances where senior management has overlooked or missed this behaviour. 

So, this is your opportunity as practitioners to review your accounts and how they’re being managed – and to proactively report anomalies to us before we find them. 

Indeed, this is part of your requirement under the Bankruptcy Act.

Failure to meet these standards calls into question whether you’re a fit and proper person to be registered as a practitioner – and may lead to disciplinary proceedings, or even criminal charges.

The third key harm we’re targeting is: Harmful insolvency advice and debt agreements.

To give you an idea of the scope of this harm, harmful advice continues to be the Number 1 issue stakeholders raise in our engagements with them. Debt agreements are second. 

We hear of incidents where advisers have urged debtors to: 

• stop paying their debts and ignore their creditors or trustees,
• make false declarations on the Statement of Affairs, and
• hide, conceal or unlawfully dispose of assets. 

Some of these behaviours can lead to debtors being found guilty of criminal offences – and imprisoned.

In terms of debt agreements, we hear complaints that administrators: 

• don't give debtors enough information to make informed decisions,
• charge excessive upfront fees, and
• place clients into inappropriate personal insolvency options.

Any advice provided to debtors must be in line with the terms of the Bankruptcy Act. 

But it’s clear from these reported behaviours that this isn’t always the case. 

This year, we’ll continue gathering intelligence about the extent and nature of harmful advice. 

And we’ll step up our response. This includes using Section 12 powers, which set out the Inspector-General’s power to interrogate misconduct where we suspect offences have been committed. 

We’ll take enforcement action against advisers where necessary and, in cases where it falls outside our regulatory remit, we’ll refer matters of serious misconduct to ASIC.

For example, we referred to ASIC allegations of false and misleading advertising by Chapter 2 Holdings, which made misleading statements that they had wiped $80 million in debt and saved consumers $30 million in interest.

In April 2025, ASIC issued 2 infringement notices to the company totalling more than $37,000. 

In the debt agreement space, we want to better understand the impact of harmful agreements and work with administrators to achieve better outcomes. 

Our expectation is for advisers to ensure any debt agreement offered to a client is affordable, meets their specific needs and does not cause unnecessary harm. 

The final harm we’ll focus on this year is: Not removing registrations on the Personal Property Securities Register. 

The PPSR is a critical piece of economic infrastructure with a potential value of around $480 billion – or 20% of national GDP. 

To maintain the quality and integrity of the register, it must accurately reflect outstanding security interests at any one time. 

Yet, we hear repeatedly from consumers and business that secured parties are slow to remove registrations, even though they’re obliged to do so ‘in a timely manner’ under legislation.

Affected consumers and businesses often only become aware of this when they are denied credit or unable to sell an asset on the basis of an outstanding security interest that has actually been settled. 

Stakeholders believe financial institutions are deliberately delaying deregistration to exert influence over consumers to refinance with them. 

As we’ve been told, this behaviour can disrupt loan settlements and delay finance applications, impacting a consumer’s ability to access credit. It can result in loss of profit for business as well. 

This is an early-stage initiative for AFSA, involving several stages. 

In the first stage, we’ll focus on education – the ‘carrot’ approach, if you will – to encourage compliance. 

We’ll review existing PPSR registrations to determine the potential scale of lapsed registrations and engage with key stakeholders on how we can address our concerns. 

From there, we’ll develop a scaled compliance approach – with the option to move to potential enforcement measures – or the ‘stick’ approach – if needed. 

The 4 key harms I’ve just outlined form the basis of our Regulatory Action Statement for 2025-26. 

You’ll be able to find the Regulatory Action Statement – and a transcript of this speech – on the AFSA website. 

We’re also happy to receive any of your questions or comments, which you can raise with me or your senior AFSA contact.

Community

The third key requirement for ensuring the fair and effective operation of the systems we regulate is community. 

In a nutshell, people working in insolvency should reflect the communities they serve. 

This is why in my time leading AFSA, I’ve focused on gender equity and raising the percentage of women working in personal insolvency. 

As you know – and you only need to look around this room to see it – women are vastly under-represented in the insolvency industry. 

While women represent 45% of people experiencing personal insolvency, they make up only 15% of registered trustees and 10% of liquidators.  

Things are improving – slowly.

Since 2022, when AFSA mandated that 20% of bankrupt estates should be allocated to female practitioners, the proportion of female registered trustees has increased from 9% to 15%. 

So, there’s been some success but clearly, there is still some way to go. 

For this reason, we lifted this target from 20% to 25% on 1 July.  

The National Panel, through which these estates are allocated, has proven to be an avenue for women to get a foot in the door of the personal insolvency industry. 

It enables them to access estates without relying on traditional referral networks. 

It’s just the right thing to do. It’s what the community expects. And it builds confidence that the system is there to serve the community. 

Conclusion

What I’ve outlined today is our holistic approach to regulation. 

It puts culture front and centre of our regulatory oversight. If we all follow good ethical standards, the regulatory burden will be light. If we all swim between the flags, there will be very little need for regulatory intervention. 

We want a strong personal insolvency system where there’s collective stewardship and we all play a role in maintaining the integrity of the system we work in. 

This builds public confidence, ensures the flow of credit in the economy and fosters business dynamism and entrepreneurial endeavour – and drives productivity. 

Our regulatory approach demonstrates currency, by addressing immediate harms to the system. 

Our Regulatory Action Statement tells you where we will focus our resources and efforts this year. 

It puts you on notice about the behaviours we seek to encourage and deter.

And finally, our regulatory approach embraces community, reminding us all that it is the public we’re ultimately here to serve. 

I’ve left some time for questions and I’d be happy to take them now. 

Thank you.