Review of insolvency practitioner regulation

A review of aspects of the disciplinary process for insolvency practitioners that was introduced by the Insolvency Law Reform Act 2016 is being conducted. That Act introduced some novel arrangements for the regulation of bankruptcy trustees and company liquidators (insolvency practitioners or IPs). 

In particular, a range of ‘industry bodies’ are co-opted into the IP regulatory framework, giving them access to confidential conduct information from the regulators – ASIC and AFSA, and allowing them, perhaps obliging them, to refer suspected misconduct of an IP to those regulators. These provisions commenced on 1 March 2017 and have now been in operation well over 12 months.

The industry bodies are:

a)      ARITA;

b)     CPA Australia;

c)      Chartered Accountants Australia and New Zealand;

d)     the Institute of Public Accountants;

e)      the New South Wales Bar Association;

f)       the Law Society of New South Wales;

g)      the Victorian Legal Services Commissioner;

h)     the Victorian Legal Services Board;

i)       the Bar Association of Queensland;

j)       the Queensland Law Society;

k)      the Legal Practice Board of Western Australia;

l)       the Law Society of South Australia;

m)   the Legal Profession Conduct Commissioner of South Australia;

n)     the Law Society of Tasmania;

o)      the Law Society of the Australian Capital Territory;

p)     the Law Society Northern Territory.

For the purposes of a forthcoming academic article, a review of how these industry bodies have taken on these responsibilities is being conducted.  The responsibilities are assessed from several angles – the protection of the public, the protection of the rights of IPs, and the responsibilities of the industry bodies and their protection.

The review does not necessarily call for responses from the various industry bodies engaged – information will be obtained from their websites – although they may do if they, or any of their individual members, wish.

The new law is to be found in the Bankruptcy Act 1966, the Insolvency Practice Schedule (Bankruptcy) 2016, and the Insolvency Practice Rules (Bankruptcy) 2016; and the Corporations Act 2001, the Insolvency Practice Schedule (Corporations) 2016, the Insolvency Practice Rules (Corporations) 2016 and the ASIC Act 2001. The regulators’ rules and guidance will also be covered. Principles of natural justice, transparency and professional regulation will be a further guide for the review.

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