Last week the Australian Financial Review reported the Small Business Ombudsman Kate Carnell as having said that the Banking Royal Commission had missed an opportunity to uncover ‘a cozy relationship’ between banks and the administrators and receivers who work for them.
Most service providers and suppliers work very hard to have a good relationship with their customers, and restructuring and turnaround professionals are no different – but presumably the ASBFEO is concerned with something improper.
Significantly, the ASBFEO Act requires (section 69, here) the Ombudsman to transfer matters to another agency if:
‘the request could be more conveniently or effectively dealt with by the other agency’
ASIC has both the legal powers of compulsion and the technical expertise to investigate the Ombudsman’s concerns. More importantly however, ASIC already receives copies of the Declaration of relevant relationships and declaration of indemnities (DIRRI)* which a registered liquidator must prepare on each occasion he or she is appointed as liquidator or voluntary administrator. The DIRRI – which is also given to creditors – provides considerable detail about an appointee’s relationship with those who appointed him or her, as well as relationships with significant creditors.
That wealth of public disclosure means that neither ASIC nor the Royal Commission would need to do a great deal of ‘uncovering’ to understand the nature and extent of the relationships between banks and the restructuring professionals they appoint, were either to decide that an investigation was warranted.
All of which stands in marked contrast to the situation as regards pre-insolvency advisers: no licensing, no regulation, no regulator, no standards, and no disclosure about their relationships!
*The DIRRI is now an online form accessible via a portal available to registered liquidators, but for those interested the ARITA Code of Practice includes a template (at page 100).