Last month we started a series of articles on the regulators and the review processes in the insolvency industry. The first line defense for people aggrieved by the actions or decisions of insolvency practitioners are the professional bodies in the industry.
[We must apologise to the National Institute of Accountants and its members. We omitted the NIA from the list of General and Professional Bodies in last month’s article. We assure you that this was purely an oversight on our part.]
Almost all insolvency practitioners are accountants and members of one or more of the professional accounting bodies recognised in the counutry – The Institute of Chartered Accountants in Australia, CPA Australia, the National Institute of Accountants etc. These professional bodies have different, though substantially similar, codes of conduct designed to ensure that the conduct of their members stays within the ethical and professional guidelines – and each body has a complaints policy dealing with complaints made against their members when they step outside those guidelines.
People aggrieved by the conduct of members of these bodies are encouraged to lodge their complaints with the relevant professional body. Most, but not all, insolvency practitioners are also members of the Insolvency Practitioners Association (IPA), whether associate or full members. Using this body as an example – as it is the professional body of the insolvency profession – and quoting directly from their website (www.ipaa.com.au):
Maintaining professional standards is one of our core objectives. Complaints are important and will be properly dealt with. They fall into three categories:
- misunderstanding of the processes being undertaken, often caused by a failure of effective communication by the appointee;
- matters that can be readily resolved by discussion;
- serious matters requiring further action.
Most complaints fall into the first category. At the IPA we receive about 50 complaints per year. Only a few fall into category three.
The IPA will:
assess your complaint, and then we will advise you what we are doing about it. We do not have many official remedies open to us. However, we can:
- negotiate with the appointee to see if the matter can be resolved;
- look for a pattern of dishonesty, unfairness, fraud or incompetence which we can take action against;
- refer the matter to the relevant regulator and foundation
But each body only can deal with complaints against their own members. The IPA states:
We have no jurisdiction to intervene if the person you’re complaining about is not a member of the IPA. We will however help you find the right regulator to ensure your complaint goes to the right area.
While by no means a paper tiger – most practitioners are anxious to remain on side with their professional body – the truth is that other than by persuasion and mediation the IPA can not do much to resolve disputes. If the dispute cannot be resolved through this process, it will usually be referred to one of the government industry bodies, usually the ASIC or ITSA.
We will outline the mechanisms these bodies can use to resolve disputes in next month’s newsletter.