Registered bankruptcy trustee remuneration is in the news again, thanks to the annual report produced by Australian Financial Security Authority (AFSA). It really should not be!
AFSA have concluded that the remuneration system doesn’t appear to be working effectively and that the level of dissatisfaction with remuneration is higher than the yearly number of complaints suggest.
There were only 15 remuneration complaints for FY2019 (down 44% on FY2018) compared to 27,000+ new personal insolvencies. 14 complaints were withdrawn or declined.
I wonder how much money was spent in producing this report?!?
But why do I take issue with the report:
- Page 8 admits that in 63% of all personal insolvencies the registered trustee received no remuneration.
- Assuming private bankruptcy appointments are 7,500/yr and average lost remuneration is $15,000 (that’s about $71m in pro bono work each year or $354k per Trustee).
- Page 8 admits that the average actual remuneration received by trustees is only $4,804!! This is below the statutory minimum of $5,272.
- The lack of creditor engagement, I hypothesis, comes down to the new reporting required under the ILRA. It is too many words, too many attachments and can be daunting to unsophisticated creditors. A basic bankruptcy report can typically be 50+ pages. 9 pages of explanatory attachments and 19 pages on remuneration!
- To vote on remuneration, a creditor needs to fill out around 3 separate sheets of paper, called voting forms. These are inefficient and highly manual. See below screenshot as an example:
Registered trustee remuneration scrutiny is incredibly important, and I will always advocate for best practice. But the current approach is not going to work. More words, more FAQ’s, etc, are not the answer.
What do you think we could do to fix the perceived issues with remuneration?
The views contained in this article are my own only.
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