NZ insolvency practitioner co-regulation – new law proposed

In a forthcoming article, I examine an aspect of Australia’s new regime for the (over) regulation of insolvency practitioners, which involves an unsatisfactory system of close government regulation supported, purportedly, by professional body and government agency involvement.

I compare this unfavourably with the UK and what is proposed in New Zealand, saying that “New Zealand is considering a similar model to that of the UK, with much of the regulatory infrastructure already existing under the accreditation system established by CAANZ and RITANZ. The lower cost of co-regulation is also a consideration”.[I]

The NZ government has now issued a supplementary order paper (SOP) to the Insolvency Practitioners Bill, tabled in parliament on 28 June 2018.

This SOP proposes to have the Bill implement a co-regulatory licensing framework whereby insolvency practitioners would need to be licensed by an accredited body under a new stand-alone Insolvency Practitioners Act.

Accredited bodies may issue licences and carry out various other regulatory functions.

The Registrar may grant accreditation to a person if the Registrar is satisfied that the person —

  • will implement and maintain regulatory systems that are adequate and effective; and
  • meets the minimum standards for the grant of accreditation prescribed; and
  • is a fit and proper person.

Accreditation may be granted to licensing bodies subject to conditions, including those—

  • relating to the procedure that an accredited body must follow when performing regulatory functions:
  • to ensure that the accredited body’s regulatory systems are adequate and effective:
  • requiring the accredited body to seek consent from the Registrar before making any material changes to the rules of the body in relation to the licensing of insolvency practitioners.

Accredited bodies must have rules covering certain conduct and disciplinary matters (including, for example, the investigation of complaints, the hearing of complaints, and appeals against decisions of a disciplinary body). The rules would have statutory force.

The Registrar must publish —

  • at least every 4 years, a plan relating to the Registrar’s intentions in relation to insolvency practitioner regulation and oversight; and
  • policies in relation to how the Registrar acts, or proposes to act, in determining applications for accreditation and in imposing conditions of accreditation.

The Registrar is to monitor the regulatory systems of each accredited body in order to determine the extent to which those systems are adequate and effective and to report on those systems.

Cost

The regulatory cost is in the order of $1 million annually, with a proposed NZ$2 levy on all company registrations.

In contrast to Australia’s system, NZ’s looks good.

RITANZ

RITANZ’s new Code of Professional Practice commences on 1 July 2018.  This new NZ co-regulation system is proposed for 2019.  Revision of the Code, based on ARITA’s 2104 Code, will be needed.

There are other useful core insolvency provisions in the Bill, to be explained soon.

[i] See the Review of Corporate Insolvency Law, Report No. 1 of the Insolvency Working Group, July 2016.  See also the Insolvency Practitioners Bill.

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