Review of ASIC’s Annual Report 2016-2017 – 22 June 2018

The House Standing Committee on Economics is conducting an inquiry into ASIC’s 2017 annual report, this Friday 22 June, in Canberra.

An inquiry report on ASIC’s 2016 annual report is here, covering many banking, financial planning, superannuation, industry funding and other issues to which ASIC will, in light of recent developments, no doubt be expected to report. My own insolvency focused comment on that annual report is here.

Section 136 of the ASIC Act

Section 136 requires ASIC’s annual report to include, in the context of insolvency regulation,

(ca) information about the activities that ASIC has undertaken during the period in exercise of its powers, and performance of its functions, under Chapter 5 of, or Schedule 2 to, the Corporations Act and any provisions of that Act that relate to Chapter 5 or Schedule 2.

This includes a report on ASIC’s information gathering powers under s 30B of the ASIC Act, including to require liquidators to give information and produce books: ASIC Reg 8AAA. Section 30B can allow ASIC to demand a liquidator’s firm’s policies and procedures in relation to their conduct of insolvent administrations.

The insolvency practitioner regulatory reforms under the Insolvency Law Reform Act 2016 commenced on 1 March 2017. While they had been in operation for only 4 months for the purpose of s 136 ASIC Act, they were well anticipated. And s 306 of the ASIC Act is clear in providing that the new requirements under s 136 apply “to reports on ASIC’s operations during the financial year ending on 30 June 2017, and later financial years”.

The annual report 2017

However, as much as the ASIC 2016-2017 annual report says, it is that the Insolvency Law Reform Act 2016 came into effect on 29 February 2016 (scil 2017) and that ASIC then released a new regulatory guide for registered liquidators on registration, disciplinary actions and insurance requirements to reflect the Act’s reforms. That is Regulatory Guide RG 258 Registered liquidators: Registration, disciplinary actions and insurance requirements. That refers to the industry notices under s 40-100 without much more.  It says that its decision in responding to an industry notice is informed by its generic Information Sheet 153 – How ASIC deals with reports of misconduct.

The annual report does not cover ASIC’s guidance or activity in relation to the various regulatory notices that it may serve on a liquidator (see for example s 40-15 IPSC – ASIC direction to a liquidator not to accept further appointments); its relations with AFSA, in light of the provision – s 10-5 – requiring the two regulators to “work co-operatively”; the use of confidential discipline committee information (s 50-35); and the new confidentiality arrangements with the various industry bodies.

In light of the various matters that the last House report noted for particular review – banking, superannuation and more – it may not be that these insolvency issues come under scrutiny in the hearing on 22 June; but others may hereby now be aware of them.

Scalps

As to another matter – of culture – the House committee may also be looking to see if ASIC still reports its

“scalps” – its “lists of civil actions, prosecutions, fines and undertakings and so on”

in light of previous questioning as to whether anything in its

“legislation or instructions from government” forced it “to report in that sort of way …. ?”

The others

The annual reports of CADB, APRA, ACCC and more are also under current review.

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