Attorney-General Robert McClelland and Parliamentary Secretary to the Treasurer David Bradbury have today announced a package of reforms to modernise and harmonise Australia's insolvency industry.
A Modernisation and Harmonisation of the Regulatory Framework Applying to Insolvency Practitioners in Australia contains a range of concrete proposals to reform the way insolvency professionals are registered, disciplined and regulated. These proposals will go out to public consultation and form the basis of draft legislation.
These proposals will provide for a more robust regulatory regime, a more efficient and transparent insolvency industry that delivers a better outcome for creditors, and greater powers for creditors to remove practitioners and curb excessive fees.
As part of the reform package, the Government will be providing the Australian Securities and Investments Commission (ASIC) with $11.4 million in additional funding to strengthen its surveillance and discipline of practitioners.
"This reform package seeks to ensure that Australia's insolvency industry is underpinned by professionalism, efficiency and improved outcomes for creditors," said Mr McClelland.
"Recent high-profile cases of misconduct by corporate insolvency practitioners have had a profound impact on confidence in the insolvency industry," said Mr Bradbury.
"These reforms are about restoring the community's confidence that there is a system of effective regulation, high professional standards, transparency and accountability and power for creditors to remove liquidators if necessary."
Key reform proposals include:
- New powers for ASIC to compel practitioners to answer questions about an administration or their conduct;
- changes to the standards of entry to require practitioners to have undertaken insolvency specific education and a new registration and disciplinary system based on the personal insolvency regime;
- changes to the way information is distributed to creditors and a new right for creditors to remove a practitioner;
- giving creditors the power to pass a resolution capping practitioner fees;
- removing conflicts of interest by preventing practitioners and their related parties from deriving a benefit from the use of disbursements without the approval of creditors.
As part of the reform package, from 1 July 2012, insolvency notices will be required to be posted to a new website to be established as part of the ASIC website, replacing 53,000 newspaper advertisements over the next four years and making it easier for creditors to access information. This measure is expected to save the industry around $15 million over the next four years.
These proposals follow extensive consultation with stakeholders on a broad range of policy options that were released for discussion by the Government in June 2011.
"An important element of the proposals is the alignment of personal and corporate insolvency regulation. These proposals seek to deliver greater consistency and less complexity, particularly for small business creditors dealing with interrelated corporate and personal insolvencies," said Mr McClelland.
"Through this reform process, the Gillard Government is strengthening the checks and balances in place, and better equipping regulators with the tools they need to ensure that Australia's insolvency industry promotes a high level of practitioner professionalism and competence," said Mr Bradbury.
"It is imperative that the framework for insolvency regulation advances transparency and communication between practitioners and stakeholders, and promotes efficiency in insolvency administration."
The proposals paper can be found on the Treasury website. Consultation on the proposals paper closes on 3 February 2011.
14 December 2011