Public sector annual reports nowadays are often more inward looking than in the past, agencies being required to report on a range of issues about their workload, staffing conditions and whether various KPIs have been met, which they invariably have.
AFSA’s 2022 annual report of 157 pages is no exception.
Some relevant information from it is that they were only 9545 personal insolvencies in 2021-22 with bankruptcies (5986) and debt agreements (3414) continuing to fall from a low COVID-19 impacted base. There are 203 trustees and 64 RDAAs. These figures compare with the figures from 2015 – 17,163 bankruptcies and nearly 11,000 debt agreements – the lowest since 1995.
There is an elephant in the room here that the annual report does not mention.
Instead, AFSA refers to its vulnerability framework, its industry consultations, and its use of behavioural approaches to regulate compliance. A case example is that the Official Trustee reported a matter to the Inspector-General who then monitored the adviser’s behaviour and took “strong action when we determined that they were undermining the personal insolvency system”.
AFSA also administers the PPSR and records over 11.5 million PPS searches over the year and close to 2 million new registrations.
One would not be aware of the significance of bankruptcy to the community, the legal system and the economy from reading this report. Nor is there reporting of those who work with AFSA – the ATO and ASIC generally, and the small business ombudsman, and others.
ASIC devotes a few useful pages to insolvency in its 2022 annual report; it is required to do so by s 136(1)(ca) of the ASIC Act 2001.
The 2021–22 year saw an approximate 21% increase in liquidations and a decrease of 39% in AA Fund applications, as compared with 2020-2021. ASIC paid and committed the amount of $9 million in AA funds to liquidators in 2021–22. The 475 applications for funding included 377 director banning reports (38% decrease); and 44 funding liquidator actions to recover assets (29% decrease). ASIC also funded the appointment of one reviewing liquidator and liquidators to seven (only) abandoned companies. The average banning period for funded matters was 46 months, with 1 criminal conviction/prosecution. There have also been approvals for liquidators to undertake numerous public examinations. While funding under s 305 of the Bankruptcy Act is inconsequential, ASIC paid or committed over $9m to liquidators in the last year.
There were 646 registered liquidators handling 4924 external administrations and controllerships. 21 new liquidators were registered. As to regulation, ASIC reports on its Data Lake platform and its capacity to apply algorithmic processes to large volumes of text to identify suspect key words, patterns and sentiments; it applies this process to DIRRIs. ASIC issued four s 40-5 directions to three liquidators; in one case, the documents were not lodged, and consequently ASIC issued a direction to the liquidator to not accept further appointments, under s 40-15. One disciplinary committee acted to reprimand a liquidator and direct him not to take further appointments for a period. ASIC achieved 163 convictions of individuals who failed to assist liquidators, one of which one received a custodial sentence. ASIC received 4313 s 533 reports, most in relation to alleged offences. ASIC issued notices to liquidators requiring information or books, under s 30B ASIC Act 2001.
The extent of any communication or co-operation between ASIC and AFSA about insolvency regulation is not stated by either body.
Til next year….