AFSA has properly drawn to my attention that figures I have given about the remuneration of bankruptcy trustees have not been correct, or correctly explained from its figures. This seeks to redress and correct that.
As AFSA explains, its Report, Registered trustee remuneration in the personal insolvency system, did not say, as I have recounted, that ‘63% of registered trustee bankruptcies do not result in remuneration’.
The Report said that
In 2018–19, … in 63% of bankruptcies administered by registered trustees, no remuneration was recovered at all.
The Report went on to say that
The average remuneration drawn by registered trustees in each matter in 2018–19 was $4,804, including matters in which no remuneration was drawn.
The point properly made is that AFSA was giving data on a particular financial year, which I then transposed to a general proposition.
Over the life of a bankruptcy
As AFSA has further explained to me:
Over the life of the bankruptcy, which may be 3 plus years, the percentage of matters in which remuneration is drawn is higher. Analysis done for the 2018-19 year showed that 69% of registered trustee bankruptcies finalised in that year had remuneration drawn in one or more years of the bankruptcy and that in finalised cases where remuneration was drawn, the average remuneration was $29,532. In 2018-19, 31% of bankruptcies finalised in that year produced no remuneration in any year of the administration.
Other figures in the Report are that
In 2018–19, of the $230.35 million distributed by registered trustees, 32.2% was paid in dividends to creditors while 40% was paid in practitioner remuneration. The remaining 27.8% was for trading payments, cost of administering estates, bank fees and charges, realisation charges and interest charges.
AFSA has asked that I correct and explain this, which I am doing now, and also by way of a review of my past comments. At the same time, AFSA says it will amend the relevant section of the Report. It would assist if it were also to explain the relevance of one year’s statistics only being reported.
I will review my earlier comments based upon the ‘63%’ but whether it be that % or 31%, my comments may remain the same.
AFSA does well in gathering, collating and publishing statistics on personal insolvency. Academics have access to its figures and produce some very useful results, the University of Melbourne reports being some.
In 2010, a Senate Committee recommended that a new Insolvency Practitioners Authority be formed between AFSA and ASIC, to gather and report data on corporate and personal insolvency. This was never adopted although in the meantime, AFSA has appointed a Chief Economist and Statistician and others to pursue that data, including, most recently, to include some corporate data.
As to AFSA’s statistics generally, these are on its website, although some are extracted by it for particular purposes. For example, in its 31 January 2018 submission to a Senate Committee on the one-year bankruptcy bill, it offered statistics on the difference between the limited number of objections to discharge filed by trustees, compared with the Official Trustee; and at what point in the 3 year bankruptcy period – early or late – they were filed.
In respect of remuneration, further figures could usefully be extracted to show what remuneration is paid to trustees in the second and third years, and to what extent that is from income contributions.
A concern about the lack of corporate insolvency statistics recently prompted a group of academics to make a submission to the Data Commissioner, in relation to what was then pending legislation designed to assist in legal, economic and social research.
No doubt that law is in abeyance, but for the future, the need for data in all areas can assist in policy and law developments, and in response to sudden crises and to record and monitor their impact. AFSA’s new ‘fortnightly’ statistics on the COVID-19 crisis will address that need.