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2020 will be a year that none of us forget for some time to come. First was the devastation of the bushfires that ravaged the country, and then the social and economic impacts of COVID-19 and our efforts to bring it under control. This is the backdrop as I reflect on AFSA’s work during 2020 and consider the year ahead.
The challenges of 2020 did not to alter AFSA’s commitment to being a firm and fair regulator and a world class government service provider. However, while our direction remained the same, AFSA’s priorities and cadence have been tempered by the changing economic conditions.
As you know, AFSA’s responsibilities require us to strike the right balance between those seeking relief from unmanageable debt and the legitimate interests of creditors, while also supporting individuals and businesses to use the Personal Property Securities Register (PPSR) to help them manage risk.
Our continued close engagement with those that use and rely on the personal insolvency and personal property securities systems has been key to ensuring our approach remains fit-for-purpose. For example, when the consequences of COVID-19 began to be felt, we set clear expectations about how all personal insolvency practitioners should conduct themselves when responding to the unique challenges that the pandemic created. This was complemented by the work I mentioned last year around the importance of maintaining the right professional culture. Our consultation with key stakeholders during the year led us to the release of specific guidance on culture.
In 2020 we made several service enhancements to both improve user experience and support positive regulatory outcomes. Two of these stand out as good examples. As I anticipated in my message this time last year, in early 2020 we released a streamlined bankruptcy application form focussed on reducing complexity, while making it much simpler for users to give us the right information at the outset. This was followed in October with a fully digitised bankruptcy application process that included specific measures to help users make well informed decisions about entering into bankruptcy. We are grateful to Financial Counselling Australia and the Consumer Action Law Centre for generously sharing their knowledge and insights to help shape those improvements, particularly in relation to more vulnerable members of our community.
In addition, the emergency economic measures in relation to the Bankruptcy Act that came into effect in March provided an opportunity for us to digitise the Temporary Debt Protection service (previously known as the declaration of intent). This not only modernised the service so we could efficiently manage any potential surge in demand, but also provided an opportunity to simplify it.
The last 12 months have given us a much more heightened sense of how the personal insolvency and personal property securities systems play a complementary role in supporting the flow of credit into and throughout the economy. This led us to develop targeted information products for less frequent users of the PPSR – particularly to help smaller creditors manage financial risk more effectively in these uncertain times. We also we worked with the Government’s Behavioural Economics Team to identify improvements to the PPSR registration process. We will roll out those changes during 2021 and conduct research to gauge how successful they are in influencing user behaviour in a positive way.
We are very grateful to a wide range of stakeholders, including the Australian Small Business & Family Enterprise Ombudsman (ASBFEO), for providing invaluable feedback about the PPSR. We look forward to reviewing further recommendations in the new year to help overcome barriers to the effective use of the register by the small business sector.
As a cost recovery agency, I am committed to ensuring AFSA operates as efficiently as possible – both in how we deliver services and how we regulate. For that reason, we spent much of 2020 considering options for replacing the technology that supports the personal insolvency program. We expect to make a decision about how to progress this significant project mid next year, recognising that digital transformation is only partly about technology and needs to be aligned with other changes to how we operate.
In last year’s message I spoke about the changing nature of the personal insolvency system. I highlighted my concern to clarify the boundaries between the role of the Official Trustee and private practitioners. I believe the Official Trustee should, first and foremost, investigate public interest matters, even where they do not deliver revenue to AFSA. 2020 has only reinforced the importance of this for me.
To that end, we worked with bodies representing private practitioners over the last few months to define criteria to enable us to efficiently redirect commercially viable work to the sector. This will free us up to spend more time and resources on public interest matters which in turn will preserve confidence in the system as a whole. We will be consulting with a broader range of stakeholders regarding the criteria in the new year via the AFSAsandpit.
Concentrating on work that is in the public interest may have an impact on AFSA’s revenue. While we are required to amend our fees to address such revenue constraints, we have delayed doing so in 2020 because of the additional burden this will place on people and creditors who use our services.
That said, our ability to make more commercially viable work available to private practitioners will depend on the sector being willing to accept that any criteria we settle on can only be a predictor of commercial viability. This means practitioners will need to continue to accept some level of risk if they choose to access work from the Official Trustee. Our approach is designed to create confidence of supply in the market, which should in turn support practitioners’ confidence to invest and innovate.
We are continuing to focus on the importance of diversity in the insolvency sector. We recognise the benefits of a diverse insolvency profession that reflects the diversity within the Australian population, as well as the benefits brought to organisations through having a diverse workforce. In collaboration with ASIC and ARITA, we conducted a survey of registered insolvency practitioners in the middle of the year to understand more about the challenges and potential actions that can be taken to improve gender diversity amongst registered insolvency practitioners. We expect to further advance that work, together with the industry and ASIC, in the course of 2021.
Thanks to everyone who has worked with us in what has been both a difficult and unusual year. We value your ongoing commitment to helping us ensure the personal insolvency and personal property securities systems remain as efficient and effective as possible. I look forward to the new year and hope that you and your families have a peaceful, safe and restful Christmas break.