The Government has released a proposals paper, ‘A Modernisation and Harmonisation of the Regulatory Framework Applying to Insolvency Practitioners in Australia’.

The paper contains a range of proposals to reform the way insolvency professionals are registered, disciplined and regulated.

Key reform proposals include:

• New powers for ASIC to compel practitioners to answer questions about an administration or their conduct;
• changes to the standards of entry to require practitioners to have undertaken insolvency specific education and a new registration and disciplinary system based on the personal insolvency regime;
• changes to the way information is distributed to creditors and a new right for creditors to remove a practitioner;
• giving creditors the power to pass a resolution capping practitioner fees;
• new funds handling rules
• removing conflicts of interest by preventing practitioners and their related parties from deriving a benefit from the use of disbursements without the approval of creditors.

From 1 July 2012, external administration notices will be required to be posted to a new website to be established as part of the ASIC website, replacing newspaper advertisements.