AFSA’s Personal Insolvency Compliance Report 2017-2018 may be rather welcome in its positive reporting of its findings in relation to its regulation of trustees in bankruptcy under the Bankruptcy Act, including the Official Trustee.
The report may be read here.
The AFSA Report gives a different picture than the equivalent ASIC report for the same period.
Although the two regulators administer the same Division 40 regulatory laws applying to both liquidators and trustees that were introduced by the Insolvency Law Reform Act 2016 commencing 1 March 2017, and they often regulate the same individuals (those registered as both a trustee and a liquidator), AFSA’s Report shows much less need to rely on the new ILRA regulatory tools than that of ASIC.
As we have explained, ASIC equivalent report said that it:
- “successfully used” a number of directions to liquidators to comply (ss 40-5, 40-10, 40-15) “on several occasions … either to resolve our concerns by achieving compliance or to advance our investigations”;
- served 2 show cause notices under s 40-40;
- exercised its power under s 40-111 to remove a bankrupt liquidator from the register of liquidators; and
- served three section 30B notices under the ASIC Act on liquidators requesting information.
In comparison, AFSA simply reports on one s 40-40 show cause notice, which presumably was the matter of Thomson.
This could simply be because trustees are better at their task than liquidators, or that each of the regulators takes different approaches. The role of ARITA and the other industry bodies, the subject of a following report, is not shown.
In that respect, ASIC did not report, nor did AFSA, on any s 40-100 industry notices lodged by ARITA, or its members, for example in relation to any of the concerns about pre-insolvency advisers, or more serious misconduct, or any exchanges of confidential misconduct information now regulated under the ILRA changes.
AFSA’s Report explained how it ensured that trustees understood and complied with the new ILRA provisions ‘which took effect on 1 September 2017’, but it did not explain how trustees and ARITA and the industry bodies understood and attended to their new authority under the earlier regulatory laws commencing 1 March 2017.
It may be that AFSA has offered guidance to the industry bodies on their new authority and obligations, or that it is till yet to come. That may be the real explanation for why the new regulatory tools appears to be so little used; either that, or they were never needed.