What are the main changes that may affect me as a Registered Trustee when the first tranche of changes commences on 1 March 2017?
- In terms of how the legislation is expressed, the introduction of the term “regulated debtor” in Division 5 of the Insolvency Practice Schedule (Bankruptcy)being a bankrupt, persons whose property is subject to control under Division 2 of Part X, a debtor under a Personal Insolvency Agreement or a deceased person whose estate is being administered under Part XI.
- The requirement in Division 30 of the Insolvency Practice Schedule (Bankruptcy)to lodge an Annual Trustee Return (Form 32) within 1 month after the anniversary of registration as a trustee, giving certain information about the trustee’s practice including but not limited to details and evidence of insurance cover. From 1 March 2017 the form can be found here.
- The requirement in Division 25 of the Insolvency Practice Schedule (Bankruptcy)to have adequate and appropriate fidelity insurance and professional indemnity insurance. See question 2 below in relation to what is adequate and appropriate.
- For any of the trustee’s staff wanting to become registered as a trustee, changes to the experience and qualifications prescribed to become a registered trustee – further information can be found in Rule 20-1 of the Insolvency Practice Rules.
- Greater disciplinary powers to the Inspector-General (and disciplinary committees) to suspend or cancel the registration of a trustee, or direct the trustee not to accept further appointments in certain circumstances. These powers are set out in Division 40 of the Insolvency Practice Schedule (Bankruptcy).
- The Register of Trustees being publicly available (on the AFSA website) and displaying prescribed information in respect to the trustee’s registration and disciplinary record as set out in Division 15 of the Insolvency Practice Rules.
- The requirement for trustees to notify the Inspector-General using an approved form, (Form 33), “Notification of Significant and Other Events” of certain prescribed events that may have a bearing on their capacity or suitability to practice as a trustee. From 1 March 2017 the form can be found here.
- Industry bodies having the capacity to notify the Inspector-General in an approved form (Form 35), of possible grounds for disciplinary action. Section 40-100 of the Insolvency Practice Schedule (Bankruptcy) refers. From 1 March 2017 the form can be found here.
- Renewal of registration application by way of an approved form, (Form 31), “Application for Renewal of Registration”. From 1 March 2017 the form can be found here.
- Performance Standards for Trustees from 1 March 2017 being in Division 42 of the Insolvency Practice Rules and incorporating a new standard on communication. Note also the new requirement for a trustee when notifying a bankrupt of their income contributions liability to notify them of their right to seek a review of the assessment by the Inspector-General within 60 days. A table comparing the old standards which were in Schedule 4A of the Bankruptcy Regulations 1996, with the new standards can be found here.
- It is a condition on the registration of any person as a registered trustee, prospective from 1 March 2017, that the person undertake at least 40 hours of continuing professional education during each year that the person is registered as a trustee at least 10 hours of which must be capable of being objectively verified by a competent source. The requirement is contained in Division 20 of the Insolvency Practice Rules.
A new provision at section 100-5 of the Insolvency Practice Schedule (Bankruptcy) about assigning rights to sue which provides as follows:
- Subject to subsections (2) and (3), the trustee of a regulated debtor's estate may assign any right to sue that is conferred on the trustee by this Act.
- If the trustee's action has already begun, the trustee cannot assign the right to sue unless the trustee has the approval of the Court.
- Before assigning any right under subsection (1), the trustee must give written notice to the creditors of the proposed assignment.
- If a right is assigned under this section, a reference in this Act to the trustee in relation to the action is taken to be a reference to the person to whom the right has been assigned.
- new provisions about Court oversight of registered trustees in Division 45 of the Insolvency Practice Schedule (Bankruptcy)
- For a table showing the new provisions under the first tranche commencing 1 March 2017 and the provisions they are replacing see here.