At the same time that the chair of the Australian PJC inquiry into corporate insolvency, Senator Deborah O’Neill, said that self- or co-regulation of insolvency practitioners (IPs) is one way of reducing the extent of government regulation, the UK has decided to do away with its co-regulatory approach in favour of direct government regulation of its IPs.
The UK is to “move towards a system of regulation with a single independent regulator, and away from the recognised professional bodies that we see today”. This is the outcome of a long consultation process which commenced in December 2021: The future of insolvency regulation – GOV.UK (www.gov.uk).
The UK has 4 recognised professional bodies (RPBs) as co-regulators – Chartered Accountants Ireland (CAI), Institute of Charted Accountants in England and Wales (ICAEW), Institute of Chartered Accountants of Scotland (ICAS), and Insolvency Practitioners Association (IPA), with the Insolvency Service acting as oversight regulator. The RPBs are required to regulate in accordance with statutory regulatory objectives under the Small Business Enterprise and Employment 2015, “which aim to ensure fair treatment, transparency, integrity, consistency and delivery of high-quality services at a reasonable cost”.
That UK move is significant given what are generally seen as the benefits of co- or self-regulation and the high level of trust, powers and responsibilities the law accords IPs. It is also significant in doing away with a co-regulatory system that dates from the beginnings of IP regulation with the commencement of the Insolvency Act 1986. Details are yet to be announced and the move to government regulation may still leave open some regulatory role for the professional bodies. Action depends on “when parliamentary time allows”.
By way of brief comparison, Australia’s threshold difference from the UK is that it separately regulates company liquidators and bankruptcy trustees, historically based and recently criticised on efficiency grounds. Australia has direct and parallel government regulation of both sectors, through two government regulators – ASIC and AFSA. There is then a thin layer of co-regulation with the powers of ARITA, the main insolvency body, and of the three accounting bodies – CAANZ, CPA and IPA – to refer IP misconduct to the relevant regulator and to receive confidential information; oddly, legal professional bodies also have these powers. ARITA also has authority to choose IPs to sit on registration and discipline committees. Only to that limited extent is there co-regulation of IPs by these “industry bodies.” There is no requirement for an IP to belong to any of these bodies. Nevertheless, standards set by these bodies, in particular the ARITA Code of Professional Practice, are influential in maintaining high standards.
New Zealand’s corporate IP regulation regime, dating only from 2019, is co-regulatory, through NZICA, RITANZ and the Registrar of Companies. It chose the UK system of co-regulation over that of Australia, largely on costs grounds, noting that the establishment of a full regulatory system would have required significant expense.
Senator O’Neill’s comments appear to be drawn from an accepted view that self- or co-regulation can serve the purpose of limiting the need for government intervention. Much depends on the nature of the industry, the potential societal harm involved, and the existing commitment of the industry itself to its own regulation. The government’s view has been that co-regulation of IPs is not suitable in Australia which then leads, arguably, to a high degree of statutory and code regulation, and complexity. As one telling example, at creditors’ meetings, the law goes to the detail of requiring bankruptcy trustees to “introduce himself or herself and … the regulated debtor”: s 75-65 IPRB.
Apart from the recommendations for a comprehensive inquiry into insolvency, the Parliamentary Joint Committee made no particular reference IP regulation or revisiting the view that co-regulation is not suitable.
England might not find Australia’s system a useful precedent, although it does provide contrasting approaches to regulation, one from AFSA, and the other from ASIC, the subject of comment in the PJC report.
Also, relative funding costs appear significant – ASIC imposes a high financial levy on liquidators; AFSA draws its funds, not from trustees, but by way of a levy on realised assets. Meanwhile, what appears to be a successful co-regulatory regime in NZ draws much of its funding from a $1.10 levy on company registrations. See The high cost of ASIC’s regulation of liquidators, in a deregulatory environment – Murrays Legal
 Keynote speech at the AIIP Conference, Canberra, 14 July 2023. Details to be confirmed.
 “ … we can go further on insolvency reform. It is the Government’s intention, when parliamentary time allows, to move towards a system of regulation with a single independent regulator, and away from the recognised professional bodies that we see today. I am very keen to take that forward when parliamentary time allows”: The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake), Hansard, House of Commons, p 176WH, 14 June 2023.
 Improving the regulation of insolvency practitioners in the UK and Australia. Would a single regulator help? – IRep – Nottingham Trent University. See also Insolvency practitioner [over]-regulation in Australia – an update – Murrays Legal
 Bodies everywhere — the role of professional bodies in regulating insolvency practitioners, Butterworths Corporation Law Bulletin, 2 November 2018, M Murray. One new exception is the small business restructuring practitioner.
 New Zealand Ministry of Business Innovation and Employment Report No. 1 of the Insolvency Working Group, on insolvency practitioner regulation and voluntary liquidations, 27 July 2016, paras 142-146.
 Regulation in Australia, A Freiberg, 2017.
 Explanatory Memorandum to the Insolvency Law Reform Bill 2015.