Arthur Sinodinos (NSW, Liberal Party, Cabinet Secretary) Share this | Hansard source

I rise to sum up the debate on the Insolvency Law Reform Bill 2015. I begin by thanking those senators who have contributed to this debate for the spirit they have brought to the process. This bill amends the Bankruptcy Act 1966, the Australian Securities and Investments Commission Act 2001, and the Corporations Act 2001, to align and strengthen the corporate and personal insolvency regimes in a number of key areas. It implements phase 1 of the government's plans to reform Australia's insolvency system.

The changes in this bill will remove unnecessary costs and increase efficiency in insolvency administrations, enhance communication and transparency between stakeholders, and boost confidence in the professionalism and the competence of our insolvency practitioners. Under the changes, the process for registering as a corporate insolvency practitioner with ASIC will be reformed to mirror the process for registering as a personal insolvency practitioner with the Australian Financial Security Authority. As a result, all applicants will now be required to undergo an interview and assessment by an expert committee made up of representatives from both industry and ASIC. To further boost confidence in the competence of practitioners, there will be new requirements for insolvency-specific tertiary qualifications and for practitioners to renew their registration every three years, rather than their registration continuing indefinitely. The bill will also strengthen the power of the regulators and the mechanisms to discipline poor performers, to promote confidence in the market for insolvency services.

The amendments provide ASIC with new information-gathering powers that will assist in its efforts to undertake an efficient proactive surveillance program of corporate insolvency practitioners. These powers include the ability to direct a practitioner to provide certain information and produce specified books to assist ASIC's activities in its role as the corporate insolvency regulator. ASIC will also be given the power to give a 'show cause' notice to a practitioner in certain circumstances, such as when it believes that the practitioner no longer has the required qualifications, experience and abilities, or when it believes that the practitioner has breached a condition of his or her registration. Where ASIC is dissatisfied with the explanation, it will be able to refer the matter to a committee, for disciplinary action which may include publicly admonishing or reprimanding the practitioner or deciding that the practitioner should not accept further appointments for a specified period. The movement to a committee system approach to practitioner discipline, based on the model currently used in the personal insolvency regime, will mean that the Companies Auditors and Liquidators Disciplinary Board will no longer have a role in the disciplining of liquidators. The amendments in this bill will also improve the confidence of stakeholders in the insolvency industry. For example, mechanisms to addresses losses from any negligence or misconduct will be improved by providing a greater deterrent to practitioners failing to maintain appropriate insurance.

The government recognises that default creditor meeting and practitioner reporting requirements are imposing unnecessary costs on administrations. The amendments in this bill will remove these requirements, while creditors will instead be able to determine when and what information they are provided by an insolvency practitioner. In addition, it will be easier for creditors to remove underperforming practitioners by allowing removal through a resolution of creditors rather than through a court order. Creditors will also be able to appoint an independent specialist to review the performance of an insolvency practitioner to inform those kinds of important decisions.

Other reforms in this bill are designed to simplify and streamline key processes and reduce the regulatory burden on practitioners and creditors. As a result, the changes in the bill are expected to save businesses more than $50 million a year. For example, amendments will encourage more efficient administrations by facilitating electronic communication with creditors and allowing resolutions to be passed without holding a creditor meeting. In addition, a default remuneration amount of $5,000 indexed will be introduced to avoid unnecessary costs in low asset administrations.

The government will soon release and consult on the updated insolvency practice rules to accompany this bill. The passage of this bill will implement the first phase of the government's reforms to strengthen and streamline Australia's bankruptcy and corporate insolvency regimes. The government will continue to work with the community to develop the next phase of reforms that will build on the great start that we are making today. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.