Faafoi KrisINSOLVENCY PRACTITIONERS BILLReport of the Economic Development Science and Innovation CommitteeHon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): I move That the amendments recommended unanimously by the Economic Development Science and Innovation Committee be adopted on this Insolvency Practitioners Bill. Madam Assistant Speaker I'd like to thank you for giving me the opportunity but not to speak to the second reading of this bill because it already has had a second reading. We are speaking to the consideration of a report of the Economic Development Science and Innovation Committee and I want to thank members of that committee for their work and consideration of this bill for a second time and for their report to the House in December last year. As I said for those who are watching this is a bit of a rare occurrence—a consideration of a report; not a second reading—because this piece of legislation has had a somewhat lengthy and chequered history. If it's OK Madam Assistant Speaker I would like to go into some of that detail. The first version of this bill was introduced into the House in April 2010 and that bill featured a negative licensing system for insolvency practitioners which empowered the Registrar of Companies to prohibit certain individuals from providing insolvency services when a business went into liquidation or insolvency. Then in May of 2011 the Commerce Committee of the time reported back on the bill and it concluded that the negative licensing system within the bill at that time would not adequately address the problems that were associated with insolvency practitioners who were dishonest or who lacked independence. The committee instead recommended a different path. It recommended that the bill as it stood then be amended so that insolvency practitioners would be required to be registered in order to undertake insolvency duties and it recommended that the bill as it stood then include offences and penalties for practitioners who failed to comply with the conditions of the licensing regime that they were recommending. Then in 2016 the previous Government identified two problems with the registration system. First of all the system as it stood would not have adequately addressed the competency and integrity issues that we were trying to address because the disqualification criteria at the time were minimal and there were no skill or experience or good character requirements to obtain registration. Then secondly the registration may have misled some users of insolvency services who might have assumed that if a practitioner was registered they had the requirements and were fit and had sufficient skills to be an insolvency practitioner. In order to address those problems the Government decided that the registration system in the bill should be replaced with a co-regulatory licensing regime. In June last year I asked that a Supplementary Order Paper (SOP) be tabled and for the bill to be considered again and we are here debating the consideration of the Economic Development Science and Innovation Committee on essentially the second consideration of this bill. So now that I have explained the weird and wonderful parliamentary procedure that this bill has traversed I'd like to talk about the purpose of the bill as it stands now. The purpose of the bill as is set out in the departmental disclosure statement is to promote better outcomes under the corporate insolvency system by strengthening the regulation of insolvency practitioners." Corporate insolvency takes place when a company is unable to pay its debts as they fall due or when its liabilities exceed its assets. The objective of a system is to ensure that any remaining assets of a company are allocated for their most efficient use with the least delay and expense possible. The bill as it stands today supports those outcomes by introducing a new regime for the licensing of practitioners providing effective ways for holding them to account and requiring such things as continuing professional development to raise the standards of practitioners' behaviours over time. These changes are necessary to ensure that all insolvency practitioners meet the basic standards of honesty competency and skills which the public will be expecting of them. Unfortunately a small number of practitioners continue to fall well short of the standards and they engage in conduct such as charging excessive fees for their services carrying out unnecessary work to inflate their fees and acting in the interests of those who appoint them and at the expense of the creditors whom money is owed to. Finally they have been taking appointments without necessary skills knowledge or experience. At the third reading of the bill it will be divided into three bills: a new Insolvency Practitioners Regulation Act featuring the new co-regulatory regime; a Companies Amendment Act; and a Receiverships Amendment Act. The proposed new licensing regime in this bill is modelled on the one in the Auditor Regulation Act of 2011 and under the system the Registrar of Companies will be required to set minimum standards of licensing for insolvency practitioners and to accredit professional bodies. These bodies will be responsible for the front-line licensing and application of the regulation of individual practitioners which will include regulating their entry and ongoing competence investigating complaints against practitioners and reporting on the adequacy and the effectiveness of their regulatory systems and processes. The bill as amended by SOP 45 which has been considered by the select committee also makes amendments to the Companies Act and the Receiverships Act and these amendments reflect new requirements for the licensing of insolvency practitioners increase the transparency of practitioner appointments improve practitioner reporting requirements and finally make other changes designed to raise the standards of practitioners over time such as requiring them to undergo regular professional development. In its report to the House the Economic Development Science and Innovation Committee has given its support to the bill and has recommended some minor changes all of which the Government will be adopting. In conclusion I want to reiterate my view that the bill will ensure insolvency practitioners have the integrity and skills needed to carry out their duties and in so doing it will enhance the integrity of the corporate insolvency system. I commend this bill to the House."