Insolvency Practitioners Regulation Act 2019 now in force
On September 1, 2020 the Insolvency Practitioners Regulations Act, 2019 came into force in New Zealand.
The law change means any practitioner dealing in New Zealand insolvency cases must comply with the Act and be licensed, which includes debt specialists, and accountants or lawyers working in insolvency.
Debtfix co-founders Shaun Adams and Christine Liggins are both licensed insolvency practitioners.
The intent of the Act is to ensure people and businesses receive quality service from professionals managing their insolvency proceedings and that people can find licensed practitioners in a searchable register, maintained by the Registrar of Companies.
To gain an insolvency practitioner licence the person should:
Be a member of an accredited body, such as Restructuring Insolvency & Turnaround Association New Zealand (RITANZ) or New Zealand Institute of Chartered Accountants (NZICA).
OR, if a person is not a member of an accredited body (e.g. NZICA) they must also enter a compliance agreement with an accredited body and agree to abide by its code of ethics, rules, and disciplinary process.
Have at least five years of insolvency work experience and/or similar.
Have a Certificate of Public Practice (CCP) or equivalent and has completed at least 1000 hours of insolvency work at a senior level within the three years prior to the licence application.
OR, does not have a CCP and has completed at least 2000 hours of insolvency work at a senior level within the three years prior to the licence application.
If the person does not have the experience outlined in 3 and 4, the accredited body may still approve an application if the person demonstrates competency.
Comply with accreditation organisations’ insolvency engagement requirements
To become a licensed insolvency practitioner the applicant must agree to comply with the accreditation organisation’s code of ethics and rules.
The accreditation organisation can also set the relevant standards required when the practitioner engages in insolvency work.
Licensed insolvency practitioners need to meet requirements when reviewed and provide reports and notifications, as required by the accreditation organisation.
The practitioner must also have indemnity insurance.
On-going professional development
A licensed insolvency practitioner needs to undertake professional development that can be verified and includes areas such as insolvency practice and ethics.
Transition process for licensed insolvency practitioners
All good things take time and the new regulations allow for a transition process so individuals can complete insolvency engagements they started working on before 1 September 2020.
However, they must complete these by 1 September 2021.
A person cannot undertake any new insolvency engagements from 1 September 2020, unless they qualify for a transitional licence.
For more details about the minimum standards for licensed insolvency practitioners, please refer to the New Zealand Gazette.