New framework for insolvency practitioners: the Senate's recommendations

This month the Senate’s Economic References Committee (the Committee) released its findings from an inquiry into the regulation, registration and remuneration of insolvency practitioners in Australia.  The report arose from concerns about the regulation of the insolvency profession by the Australian Securities and Investments Commission (ASIC).  The findings recommend a number of changes for the way corporate insolvency is regulated.  The report can be viewed at http://www.aph.gov.au/senate/committee/economics_ctte/liquidators_09/report/report.pdf .

Key recommendations

The Committee’s recommendations include:

1. that the corporate insolvency arm of ASIC be transferred to the Insolvency and Trustee Service Australia (ITSA) to form the Australian Insolvency Practitioners Authority (AIPA).  This recommendation mirrors the soon to be enacted Personal Properties and Securities Act legislation which sets out that ITSA not ASIC will be responsible for dealing with issues regarding asset registers.  How ITSA will be set up to deal with these queries as well as queries fielded by ASIC in relation to corporate insolvency has not been disclosed at this time;

2. the amendment of section 213 of the Australian Securities and Investment Commission Act 2001 to allow the deliberations and findings of the Companies Auditors and Liquidators Disciplinary Board (CALDB) to be published on the internet.  This amendment will provide for greater transparency of CALDB proceedings;

3. the creation of a new licensing system for corporate insolvency practitioners.  This will require the practitioners to:

   3.1. renew their licence every three years;

   3.2. pay a licensing fee;

   3.3. complete various education programs and examinations;

   3.4. obtain professional indemnity insurance; and

   3.5. comply with the Institute of Public Administration Australia (IPAA) Code of Professional Practice.

4. the amendment of section 1282(2)(a)(i) of the Corporations Act to expand the group of persons who can be registered as a liquidator.  This new group will allow an Australian legal practitioner holding a current practicing certificate with at least five years’ post admission experience to be registered; and

5. the creation of new rules relating to the suspension and termination of a practitioner.  This may allow the Committee to suspend a practitioner’s licence if they believe overcharging of a matter has occurred.

Comments

The report represents significant changes to the regulatory framework under which insolvency practitioners operate and to the functions of ASIC and ITSA.  If and when any changes are made to the legislation we will provide you with a further update. 

If you have any queries about this or any other insolvency issues please do not hesitate to contact:
Partner, Alison Robertson on 08 9288 6736 / alison.robertson@lavanlegal.com.au or
Associate, Joseph Abberton on 08 9288 6765 / joseph.abberton@lavanlegal.com.au.