Written by Alex Frazer in July, 2011

In September 2010, the Senate Committee produced a report titled “The regulation, registration and remuneration of insolvency practitioners in Australia: the case for a new framework”. The Committee published this report as part of an inquiry into insolvency practitioners and regulation within Australia. The inquiry was specifically established “in response to concerns raised about the effectiveness and timeliness of the operation of the regulatory regime for corporate insolvency.” This Report put forward a number of proposals to address issues which the Senate Committee believes required reform.

One of the major issues put forward in the Senate, is the recommendation that the corporate insolvency arm of ASIC be transferred to ITSA to form a new personal and corporate insolvency regulator.

In response to this Report, The Attorney-General and the Parliamentary Secretary to the Treasurer have released an options paper in June 2011 titled “A Modernisation and Harmonisation of the Regulatory Framework Applying to Insolvency Practitioners in Australia ” which seeks views on various proposals for significant regulatory reform of Australia’s insolvency industry.

The response paper noted that “there are benefits to be gained from removing unnecessary divergence between the two regimes, including reducing legal complexity, risk, and costs for insolvency practitioners, creditors, shareholders, regulators and other stakeholders.” However, ultimately the government has decided not to consider merging both ASIC and ITSA into a new insolvency regulation as there are “differences reflecting the reality that a one-size-fits-all approach to insolvency is not appropriate and will not deliver suitably tailored outcomes for both companies and individuals.”

Although the response paper does not approve the proposal for a common insolvency regulator, it does set about addressing other issues which require “exploring holistic and coordinated solutions to common problems facing both corporate and personal insolvency regulation.” Such issues which require further attention include:

• A more effective insolvency framework which will have a positive impact on stakeholders such as Businesses, Creditors and insolvency practitioners;

• Monitoring and removal of insolvency practitioners who do not minimise the risks to various stakeholders in course of their operation through misconduct; and

• Improving the value for money for recipients of insolvency services through professionalism and competency, competition on price and quality, the efficiency of practitioners and communication and transparency between various stakeholders.

PLEASE NOTE:  All information contained in the articles below was correct at time of publishing.