The annual meeting of the International Association of Insolvency Regulators, IAIR, is being held in London, from 4 to 7 September 2017. Given its timing, it may well be a show case for Australia’s recent regulatory reforms, and funding arrangements, for insolvency practitioners.
But, what does IAIR offer or provide?
IAIR says it “aims to promote liaison and co-operation and provides a forum for discussion amongst insolvency regulators”, thereby contributing “to a wider understanding of insolvency issues, procedures and practices and the development of approaches …”.
Australia is an inaugural member, since 1993, but while both of Australia’s regulators, ASIC and AFSA, regularly attend, there is little or nothing reported either by them or by IAIR itself on the issues discussed and different approaches developed. IAIR’s membership is confined to regulators. No doubt they have important regulatory issues to discuss between themselves, which are closed to outsiders, but we don’t see much or any reporting by our regulators on their return from IAIR for the benefit of Australian law reform and policy.
This IAIR might be different.
In any event, it is assumed that given the new regulatory arrangements in Australia, our novel reforms will be of great interest to the other attendees.
What is there to report?
In looking to see what is reported about those reforms, there is little to find. The minutes of the recent ARITA, AFSA and ASIC bi-annual liaison meeting held on 14 June 2017, although necessarily anodine, report little, and are in fact more interesting for what they do not say.
Australia introduced a significant change in its regulation of insolvency practitioners (IPs) on 1 March 2017, quite different from other jurisdictions and peculiar in its legal and regulatory approaches. We now have fourteen law and accounting “industry” bodies around the country with the authority to receive and hand over confidential regulator information about the suspected misconduct of IPs; with IPs and others being able to themselves whistleblow to ASIC and AFSA about their suspicions of IP misconduct; and with discipline committee members able to refer confidential committee information to their own or any industry body.
One might have also expected the ARITA AFSA ASIC minutes to have contained some comments on the number of industry notices already lodged, the extent of confidential information conveyed and generally how the process is working. They might have addressed why the registration and discipline committees, comprising practitioners, senior lawyers and other professionals, have different guidance issued by each of ASIC and AFSA; and how the fact that trustees under discipline can invoke the protection of penalty privilege but liquidators cannot is to be resolved. The minutes reveal no timing for guidance from the regulators or ARITA on how these powers will be, or are being, exercised, in particular in respect of the procedural fairness protection of IPs, or protection of ARITA’s own members.
These issues may nevertheless be the subject of inquiry and discussion at IAIR in London.
As to regulator funding, Australia can showcase its new ASIC funding levies imposed on liquidators, against the £400 annual levy in England, albeit under a differently structured regime, and a levy on assets, not practitioners, for AFSA. A summary of these funding arrangements has been provided, with an English comparison.
Given that most insolvency regulation internationally is conducted by one insolvency regulator, ASIC and AFSA will be able to report on the merits of the bifurcated regulatory model here, with only limited industry body involvement, and with differences in needs between large and small firms.
The prediction by some in the UK, as a comparison, that there will be only two professional bodies, of the several operating now, for large and small practices, may be playing out here in Australia.
The review of the insolvency Code of Ethics in the UK will be another interesting agenda item.
A final point concerns cross-border practitioner regulation. There is no apparent process whereby foreign representatives outside their home jurisdiction are regulated, either by the regulators or the professional bodies. One consequence is that that the cross-border elements of Australia’s new regulatory reforms do not have the support of monitoring processes. IAIR seems to be an ideal body to implement the necessary cross-border reporting regime.
I have raised some of these issues at judicial and legal conferences in Australia, and at INSOL Academics in Sydney in 2017, and with the regulators.
Our regulators’ report on the outcome of IAIR London will be of great interest.