The 2019 Inquiry impacting Restructuring and Turnaround professionals?

Last night the Senate asked the Legal and Constitutional Affairs Legislation Committee to conduct an Inquiry into:

The ability of consumers and small businesses to exercise their legal rights through the justice system, and whether there are fair, affordable and appropriate resolution processes to resolve disputes with financial service providers, in particular the big four banks

The terms of reference include inquiry into whether “banks generally have behaved in a way that meets community standards when dealing with consumers trying to exercise their legal rights,” which has the potential to extend into the appointment and conduct of receivers.

The Committee is due to report by 8 April 2019.  The full terms of reference are below

(a) whether the way in which banks and other financial service providers have used the legal system to resolve disputes with consumers and small businesses has reflected fairness and proportionality, including:

(i) whether banks and other financial service providers have used the legal system to pressure customers into accepting settlements that did not reflect their legal rights,

(ii) whether banks and other financial service providers have pursued legal claims against customers despite being aware of misconduct by their own officers or employees that may mitigate those claims, and

(iii) whether banks generally have behaved in a way that meets community standards when dealing with consumers trying to exercise their legal rights;

(b) the accessibility and appropriateness of the court system as a forum to resolve these disputes fairly, including:

(i) the ability of people in conflict with a large financial institution to attain affordable, quality legal advice and representation,

(ii) the cost of legal representation and court fees,

(iii) costs risks of unsuccessful litigation, and

(iv) the experience of participants in a court process who appear unrepresented;

(c) the accessibility and appropriateness of the Australian Financial Complaints Authority (AFCA) as an alternative forum for resolving disputes including:

(i) whether the eligibility criteria and compensation thresholds for AFCA warrant change,

(ii) whether AFCA has the powers and resources it needs,

(iii) whether AFCA faces proper accountability measures, and

(iv) whether enhancement to their test case procedures, or other expansions to AFCA’s role in law reform, is warranted;

(d) the accessibility of community legal centre advice relating to financial matters; and

(e) any other related matters.

The Committee is due to report by 8 April 2019.

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Inquiries dealing with the conduct and performance of restructuring and turnaround professionals since 2010:

2017 – Senate Select Committee on Lending to Primary Production Customers

2016 – Parliamentary Joint Committee Inquiry into The impairment of customer loans

2015 – Senate Inquiry into Insolvency in the Australian construction industry

2014 – Senate Inquiry into Performance of the Australian Securities and Investments Commission

2012 – Senate Inquiry into The post-GFC banking sector

2010 – Senate Inquiry into The regulation, registration and remuneration of insolvency practitioners in Australia