The Australian Financial Services Authority has released a video podcast to help insolvency practitioners meet their obligations to refer possible offences under the Bankruptcy Act 1966 (Cth) (the Act) to AFSA.

 There are two ways referrals may be made are:

1. Pre referral enquiries (PRE); and
2. Offence referrals.

Pre referral enquiries

AFSA introduced PRE’s in an effort to reduce the regulatory compliance burden on insolvency practitioners.

PRE’s may be used where:

1. a practitioner considers that an offence may have occurred; but
2. the practitioner has insufficient evidence to substantiate the claim.

PRE’s may also be used where a trivial offence has been committed that in effect has no impact on the administration of the bankrupt estate, for example a failure by a bankrupt to notify the trustee of an inactive bank account with minimal to no funds held in the account.

A practitioner can able to submit a PRE by emailing AFSA details of the bankrupt and a summary of the alleged offence.

Offence referrals

Trustees in bankruptcy have a positive duty to the Inspector General to report any evidence of an offence by a bankrupt against the Act.

Offence referrals must contain more detail than a PRE and the relevant evidence must be attached to the form when it is submitted.

A failure to refer to an offence to the Inspector General is a breach of the trustee’s duties under section 19(1)(i) of the Act and this can have very serious consequences.

For more information please contact ERA Legal.