Document ID: chunk:federal_register_of_legislation:F2020L01668:body:0:p16
Version: federal_register_of_legislation:F2020L01668
Segment Type: other
Provision Reference: 
Character Range: 40859–43824

The administrator then has 28 days to explain or show cause why their registration should not be cancelled. The final decision as to whether the registration should be cancelled will be made by the Inspector-General upon review of the administrator's response.

Categories of breaches

4.20 More specifically the following system for categorising errors provides a guide to assist the Inspector-General in determining whether to consider the process of cancellation of registration.

Category A breaches

4.21 Fundamental breaches and lack of controls that are likely to bring into question the integrity of the debt agreement system. This would include but is not limited to defalcation, systemic overcharging and systemic failure to account or maintain proper accounts and records and negligence resulting in losses to creditors or the debtor. This also includes cases where there are repeat category B errors previously identified and not rectified. These matters will generally give rise to legal action, investigation of possible Bankruptcy Act offences, or registered trustees and administrators having their registration cancelled or conditions placed on it. This also includes where an administrator is found not to be a fit and proper person.

Category B breaches

4.22 Serious or systemic breaches that will have a material impact on the administration and require timely action. The administrator or registered trustee would be counselled and timely remedial action expected to be taken. This would include a breach causing material loss to creditors or the debtor. Failure to remedy a category B breach within the specified timeframe may result in it being elevated to category A and the commencement of the cancellation process.

Category C breaches

4.23 One-off practice or procedural errors and compliance breaches that are not systemic, occurring through inadvertence rather than through lack of appropriate systems, controls and procedures. This category of breach is not likely to have a serious effect on individual administrations or creditors, debtors' rights or system integrity but should be brought to the attention of the practitioner and where possible, remedied. Repeats of a previous category C breach will result in the breach being considered to have become systemic and hence would be elevated to category B.

    Note: The name of this instrument was amended on registration as the instrument as lodged did not have a unique name (see subsection 10(2), Legislation Rule 2016).
[1] The Guidelines commence on 1 January 2021.
[2] The Debt Agreement Reform Act gives the Minister power to make legislative instruments including instruments relating to the payment to income ratio (a new debt agreement eligibility requirement). If this instrument is made, these Guidelines will be updated to reflect the relevant amendments becoming operative.
[3] Prior to 27 June 2019, an administrator was not required to be