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AFSA sounds dodgy adviser warning ahead of insolvency wave
The Australian Financial Security Authority has issued a warning around dodgy insolvency advisers ahead of an anticipated spike of bankruptcies.
AFSA sounds dodgy adviser warning ahead of insolvency wave
The Australian Financial Security Authority has issued a warning around dodgy insolvency advisers ahead of an anticipated spike of bankruptcies.
The personal insolvency regulator has now launched a public campaign to raise awareness on the prevalence of dodgy insolvency advisers and telltale signs for the public to look out for.
The Australian Financial Security Authority’s campaign comes as it is particularly concerned that those experiencing financial stress because of the economic impact of COVID-19 may be easy targets.
Some key signs that an adviser could be dubious include asking for a payment with a promise to get the person out of bankruptcy within a few months, or offering to organise a person’s affairs so their property will be protected in a bankruptcy.
Other telltale signs include recommending to include false, exaggerated or fake debts in a bankruptcy application, and advising that bankruptcy or a debt agreement will not affect the person’s credit rating.
“People who find themselves dealing with large debts for the first time as a result of COVID-19 may be tempted to turn to advisers who say they have a quick fix and later find out what they’ve done is illegal,” said ASFA deputy chief executive Gavin McCosker.
“It’s not always easy to spot a dodgy adviser, but if someone offers a solution to your financial problems that sounds too good to be true, it probably is.”
Mr McCosker said the regulator was determined to take action against such egregious practitioners to protect the industry and those experiencing financial trouble.
“Insolvency practitioners say dodgy advisers are their number one concern. If an adviser persuades someone to hide or dispose of their assets before they enter into a debt agreement or bankruptcy, everybody loses,” he said.
“When we discover or are notified about a dodgy adviser, we investigate and take action. Each year we inspect hundreds of personal insolvency administrations, and attend creditors’ meetings if dodgy activity is suspected.
“We rely on the industry and members of the community to report any activity that has the potential to take unfair advantage of people who use the personal insolvency system.”
AFSA’s warning comes as the Reserve Bank had earlier warned of an inevitable wave of business failures once temporary insolvency relief measures come to an end.
The government has since extended the relief measures to the end of the year and have also proposed a new insolvency regime that will allow businesses with liabilities of less than $1 million to continue trading while they develop a debt restructuring plan.
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