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A new report released today by the Australian Financial Security Authority (AFSA) has highlighted the critical role that independence of insolvency practitioners plays in maintaining the integrity of Australia’s personal insolvency system.
Practitioner independence in the personal insolvency system is designed to clarify what practitioner independence means in practice and address the misconceptions surrounding it.
AFSA Deputy Chief Executive, Gavin McCosker, reiterated the critical foundation that independence provides to the insolvency system.
‘Put simply, practitioner independence is fundamental to the insolvency system in Australia,’ Mr McCosker said.
‘Using examples from case law and industry guidance, our report will help all stakeholders to better understand our expectations of independence – highlighting the importance of transparency in maintaining confidence in the system overall.
‘The report provides clarity for practitioners, while also helping other parties involved understand the importance of integrity and fairness.’
In addition to discussing the importance of independence and the expectations AFSA has of practitioners, the report outlines AFSA’s expectations of debtors and creditors.
‘While much of the responsibility for independence lies with practitioners, it is also important that debtors and creditors engage with the system,’ Mr McCosker said.
‘For creditors, engaging with the system is the best defence against unfair activity. Carefully reviewing the Insolvency Practitioner declaration and raising any concerns is vital.’
‘For debtors in financial difficulty, it is important to be wary of untrustworthy pre-insolvency advisors who are unregulated and may seek to influence the proper work of insolvency practitioners. Reporting untrustworthy behaviour can help protect your interests in the long term.’
The full report is now available on the AFSA website.
More information about AFSA’s expectations of insolvency professionals is available in Inspector-General Practice Direction 1: Independence of personal insolvency practitioners.