Foss Craig: Insolvency Practitioners Bill — Second ReadingText is incorporated into the Bound VolumeFoss Craig: Insolvency Practitioners Bill — Second Reading[Sitting date: 26 September 2013. Volume:693;Page:13820. Text is incorporated into the Bound Volume.]Hon CRAIG FOSS (Minister of Commerce): I moveThat the Insolvency Practitioners Bill be now read a second time. Insolvency practitioners carry out a number of different insolvency processes including liquidations voluntary administrations and receiverships. These processes require a practitioner to carry out skilled tasks with sound judgment and integrity in order to protect and promote an efficient and effective corporate insolvency system. There is general consensus amongst reputable insolvency practitioners that there is a small number of practitioners who are continually underperforming and imposing significant costs upon creditors and failing to discharge their statutory obligations. These problems revolve around competency unethical behaviour and insufficient monitoring.The Insolvency Practitioners Bill was drafted in 2008 under the previous Government to create a negative licensing regime to regulate insolvency practitioners. Negative licensing would enable any person to practise as an insolvency practitioner unless they were prohibited. It was seen as a low-cost light-handed regulatory approach to strengthen an enforcement void: the ability to remove incompetent and dishonest insolvency practitioners from the market.The Commerce Committee considered the bill at the end of 2010 and in the first part of 2011. I would like to thank the committee for the constructive time spent undertaking a thorough examination of the bill. The bill received 11 submissions and most submitters did not think the bill went far enough to address the problems in the insolvency market. Submitters argued that in the intervening time the global financial crisis had meant that there was an increase in insolvency work and an increase in the number of insolvency practitioners taking appointments. This meant that the magnitude of the problems had become more evident. The select committee carefully considered options for regulating insolvency practitioners and reported back to the House on 9 May 2011 its recommendation to adopt a registration model instead of a negative licensing regime.Under the bill as reported back all insolvency practitioners will now be required to be registered in order to accept insolvency appointments. The Registrar of Companies will have enhanced oversight and enforcement mechanisms including the power to deregister substandard or delinquent individuals. I support this recommendation. It is important that corporate insolvencies are carried out professionally and efficiently. This bill is part of the Government’s focus on improving the integrity of our financial systems. It is important that we boost investor confidence and that investors have the confidence in our markets. It is especially important that investors know that if an insolvency practitioner is going to look into the affairs of a company they can have confidence that it can be done and will be done with integrity and that the insolvency practitioner has the minimum skills for the job.A register held by the company’s office will give the public access to basic and standardised information about practitioners who are registered. Through the register the Registrar of Companies will be able to collect information and regulate practitioners more effectively. The bill is set to come into force 9 months after the date on which itreceives the Royal assent. Insolvency practitioners have up to 3 months after this to register. The operation of the registration regime will be reviewed no later than 4 years after the legislation comes into force to recommend whether any further amendments to the regime would be necessary or desirable. More specifically the bill as reported back will amend the Companies Act 1993 and the Receiverships Act 1993 to make clear how the appointment of insolvency practitioners to and the removal of insolvency practitioners from the register will work. There will be new provisions including the eligibility criteria enhanced duties and criteria for disqualification and an appropriate range of penalties for failure to comply with statutory obligations. Under the amendments a person can apply for a court order to override any removal from the register.One important amendment is greater transparency so that creditors must be provided with relevant information by insolvency practitioners at the earliest opportunity. This includes a statement of interest by the insolvency practitioner and an additional report to the registrar that summarises the insolvency. This new regime will be a significant improvement and will help with the recognition and detection of incompetent and unethical persons who will either be prevented from registering or have their registration cancelled.A substantial amount of work has been going on behind the scenes since the bill was reported back from the select committee. I am pleased that this bill is now continuing its progression through the House. At the appropriate time I will introduce a Supplementary Order Paper that proposes further amendments to the bill to better align requirements for the different types of practitioners and clarify the obligations of practitioners. I commend this bill to the House.