Senate

Replacement Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Hon Christian Porter MP)

Notes on Clauses

Preliminary

Clause 1 - Short title

26. Clause 1 provides for the short title of the Act to be the Bankruptcy Amendment (Debt Agreement Reform) Act 2018 .

Clause 2 - Commencement

27. Clause 2 provides for the commencement of each provision in the Bill, as set out in the table.

28. The majority of the amendments in the Bill will commence the day after the end of the period of six months beginning on the day the Amending Act receives the Royal Assent. These amendments include:

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Division 1 of Part 1 Schedule 1, relating to the types of practitioners authorised to be debt agreement administrators

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Parts 2 to 6 of Schedule 1, relating to reimbursement of debt agreement administrator expenses, the value of debtor's property in a debt agreement proposal, the payment to income ratio to be applied to a debt agreement payment schedule, protections to prevent undue hardship to the debtor and measures to address the potential effects of a debt agreement administrator's conflict of interest on a debt agreement proposal

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Part 1 of Schedule 2, relating to the length of debt agreements

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Part 1 of Schedule 3, relating to applications for debt agreement administrator registration, and

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Items 16 to 29 of Schedule 3, relating to conditions of debt agreement administrator registration, the ongoing obligation on debt agreement administrators to maintain insurance, the grounds of cancellation of debt agreement administrator registration, and expanded powers of the Inspector-General.

29. This timeframe provides debt agreement administrators and AFSA with sufficient time to prepare for commencement of the reforms.

30. The following amendments are consequential to the amendments listed above, and therefore commence immediately after their commencement. These amendments include:

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Part 2 of Schedule 2, relating to proposals to vary debt agreements, which commence immediately after Part 1 of Schedule 2

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Parts 3 to 9 of Schedule 2, relating to proposals to terminate debt agreements, court orders to terminate debt agreements, voiding debt agreements, debt agreement administrators to refer evidence of debtor offences, reporting requirements for debtors in arrears, alignment of offences between the debt agreement and bankruptcy regimes, and the time for submitting annual returns, which commence immediately after Parts 2 to 6 of Schedule 2

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item 15 of Schedule 3, which clarifies the Minister cannot delegate the ability to make legislative instruments for the purposes of determining industry conditions for registered debt agreement administrators, which commences immediately after Parts 2 to 6 of Schedule 2, and

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Schedules 4 and 5, relating to technical amendments and provisions dealing with unclaimed moneys, which commence immediately after Parts 2 to 6 of Schedule 2.

31. Item 3 in the table provides that Division 2 of Part 1 Schedule 1 will commence twelve months after Royal Assent. The amendments under Division 2 of Part 1 Schedule 1 repeal and replace provisions that provide for unregistered administrators to be declared ineligible to administer a debt agreement.

32. The effect of item 5 of Division 1, Part 1 Schedule 1 (transitional provisions-replacement administrator) is that an unregistered administrator cannot administer a debt agreement 12 months from the Royal Assent. The provisions dealing with the ineligibility and replacement of unregistered administrators will be obsolete after this point. Accordingly, Division 2 of Part 1 Schedule 1 will commence twelve months after the Royal Assent.

Clause 3 - Schedules

33. Clause 3 provides that the legislation specified in a Schedule to the Amending Act is amended or repealed as set out in the Schedule.