The New Zealand government has called for submissions on the proposed minimum standards and conditions for the licensing of insolvency practitioners under the Insolvency Practitioners Regulation Act 2019, including Australian practitioners.
The Discussion Paper sets out a number of issues, some of which, by way of comparison with Australia, are these.
The Act has introduced a co-regulatory scheme for NZ corporate insolvency practitioners, coming into force in June 2020. The Registrar of Companies has responsibility for the regulation of insolvency practitioners, including prescribing the minimum standards, conditions and ongoing competence requirements for their licensing.
A second discussion paper relating to the minimum standards for accreditation of accredited bodies and will be issued later this year.
Those accredited bodies will be responsible for carrying out the frontline regulation of insolvency practitioners, including licensing their entry and regulating ongoing competence, investigating complaints about them, and taking disciplinary action where appropriate. The Registrar will be responsible for oversight of the accredited bodies.
This is the same arrangement that has applied in England since 1986.
This co-regulatory regime leverages off an existing voluntary non-statutory occupational regulation scheme that was established by CAANZ, NZICA and RITANZ. It has around 110 “accredited” insolvency practitioners, being the majority of insolvency practitioners practising in New Zealand.
The Registrar will publish an oversight plan in the second half of 2020 to set out how regulation will be conducted.
The Registrar proposes to set a minimum standard for experience based on the RITANZ/CAANZ voluntary scheme of either 1000 or 2000 hours on insolvency engagements at a senior level and at least five years’ insolvency experience, including the senior experience. Australia requires 4000 hours.
There will be a discretion to license practitioners who do not meet the hours threshold if the accredited body is satisfied that the person is otherwise competent to act as an insolvency practitioner.
The paper notes that there are currently no specific qualifications to be an insolvency practitioner. While the majority of practitioners accredited under the RITANZ/CAANZ scheme are chartered accountants and have relevant degrees, a number of reliable insolvency practitioners do not. Hence, no qualifications are to be prescribed at this stage as it would unnecessarily restrict the licensing of insolvency practitioners.
As to overseas practitioners, minimum standards for licensing may be made by reference to registration with an overseas organisation. Australian insolvency practitioners are able to practise in New Zealand subject to the requirement that they apply for a licence within 10 days of being appointed to act in respect of an insolvency engagement.
It is proposed that an Australian practitioner who applies to become licensed must be a registered liquidator under Australian law and must provide evidence of continuing experience since becoming a registered liquidator.
The Registrar expects to recognise RITANZ as a recognised body so that practitioners who cannot become members of an accredited body but who are members of RITANZ can still apply to the accredited body to become licensed; otherwise, practitioners who are not chartered accountants, such as lawyers, could not become licensed.
It is expected that accredited bodies will set standards and requirements on how its members should conduct insolvency engagements, for example, under the CAANZ Insolvency Engagement Standard, and other standards that are relevant to insolvency practice such as quality control, insurance requirements, and disclosure.
The RITANZ/CAANZ scheme requires practitioners to meet the practice review requirements set by NZICA. Non-CAANZ members must meet practice review requirements set by CAANZ to mirror these practice review requirements.
The due date for submissions is 13 December 2019.
It should be noted that no private insolvency practitioners administer personal insolvency in New Zealand; this is solely the preserve of the Official Assignee. The OA can also administer corporate insolvencies.
England’s co-regulatory arrangement is under review but only as to the number – five – of recognised professional bodies overseeing insolvency practitioners, those bodies themselves regulated by the Insolvency Service. The Official Receiver can administer both corporate and personal insolvencies.
Australia has no equivalent co-regulation system, its trustees being regulated by AFSA and its liquidators regulated by ASIC. Australia’s Official Trustee administers most bankruptcies, the remainder by registered trustees. Australia has no Official Receiver in corporate insolvency.