Continuing professional education requirements for registered liquidators

Section 20-5 of the Insolvency Practice Rules (Corporations) 2016 sets out the industry-wide CPE requirement for registered liquidators. It provides that:

• registered liquidators have a condition imposed on their registration that requires them to undertake at least 120 hours of CPE during the three years starting on the day they were first registered as a liquidator and for each subsequent period of three years during which they are registered as a liquidator, and
• at least 30 hours of the 120 hours of CPE must be capable of being objectively verified by a competent source.

For a person first registered as a liquidator before 1 March 2017, it is possible the relevant three-year CPE period will not align with the three-year renewal period for their registration as a liquidator. A person registered before 1 March 2017 must determine their three-year CPE period by counting each three-year period that has passed since they were first registered as a liquidator.

For example, a person first registered as a liquidator in 2015 would be required to renew their registration in 2017 (the year renewals were first required), 2020, 2023 and 2026. For that same person, their three-year CPE periods would end in 2018, 2021, 2024 and 2027. In this case, the CPE-periods do not match the three-year renewal periods.

In addition to the industry-wide CPE condition, a registered liquidator may have a specific condition or conditions that relates to CPE imposed on their registration by a committee.

A registered liquidator must comply with all industry-wide and specific conditions imposed on their registration.

No exemption from CPE

A registered liquidator must comply with the CPE conditions imposed on their registration even if their registration is suspended.

The legislation provides no discretion to ASIC to exempt a registered liquidator from the CPE conditions imposed on their registration.

CPE is a learning activity that must assist in developing the individual’s competence.

A registered liquidator is responsible for choosing suitable professional development activities and to judge, within the guidelines provided, whether these activities contribute to their professional development. Chosen CPE activities can relate to any competency that is relevant to the registered liquidator’s current or future professional activities.

When choosing relevant CPE, the objective of CPE should be considered, as well as how the CPE is relevant to the individual registered liquidator’s work. We expect that the majority of CPE undertaken by a registered liquidator will be relevant to their work providing insolvency services.

Objectives of CPE

The objectives of CPE are to maintain, enhance and extend an individual’s relevant knowledge, expertise and professional competence that is necessary:

• for the individual to provide quality services, and
• to strengthen public trust in the profession.

It includes:

• keeping up to date with technical developments in the individual’s area(s) of specialisation
• extending knowledge into other relevant fields
• honing existing skills and developing new ones
• developing an understanding of the practical application of new skills and knowledge, and
• applying learning and accumulating experience.

Relevance to the individual’s work

For the purpose of complying with the CPE condition imposed on a registered liquidator’s registration, CPE activities undertaken need to:

• be closely connected or appropriate to any competency that is relevant to the registered liquidator’s current or future professional activities, and
• contribute to their ongoing ability to provide quality services.

CPE does not always have to be technical in nature or specific to the law and practice associated with corporate insolvency administrations or restructuring. There is a wide variety of activities that might qualify as relevant work-related CPE, including:

• industry seminars that help to develop an understanding of, and competence in, the structure and operation of specific industry sectors (in which the individual does, or is likely to in the future, accept formal insolvency appointments)
• training directed at developing knowledge in other relevant areas of law, including employment law and contract law
• training associated with developing effective communication, negotiation or interpersonal skills
• training activities relevant to practice management
• training to assist with managing issues relevant to mental health, either within the firm or when engaging with others outside the firm, and
• improving proficiency in using IT software applications used in delivering corporate and personal insolvency services.

We expect that the mix of activities chosen reflects the individual’s learning and development needs. When there is significant law reform affecting the conduct of either corporate or personal insolvency, we expect a registered liquidator would undertake appropriate CPE activities to familiarise themselves with the new law.

There are two broad categories of CPE:

• verifiable CPE, and
• informal (‘non-verifiable’) work-related CPE.

Verifiable CPE

Verifiable CPE is a learning activity where third-party or objective evidence can be provided to support the completion of that activity.

As a general guide, verifiable CPE is more likely to:

• be structured
• be specifically designed to impart knowledge of a technical or educational nature
• have interactive learning
• sometimes have an assessment component, and
• involve teaching by competent specialists.

The balance between external and internal verifiable CPE will depend on the size, capacity and resources of a firm to deliver internal CPE.

Verifiable CPE includes:

• undertaking full-time and part-time tertiary study, including assessed online and distance learning and other structured courses
• undertaking post-graduate studies
• attending conferences, seminars and workshops provided by recognised training providers or professional bodies
• undertaking formal training provided by professional bodies and other recognised training providers
• attending in-house training and presentations – to the extent it relates to the development, maintenance and expansion of professional competence (training involving administrative tasks is not included)
• undertaking research for writing technical papers and articles
• delivering work-related presentations and training sessions or courses, including participating as a speaker at conferences, in briefing sessions and in discussion groups (only actual time engaged in researching and writing technical papers and presentation materials may be claimed – the repeat presentation of substantially the same material cannot be claimed)
• acting as a mentor or a mentee under a formal mentoring program, and
• serving on a technical committee (if the objectives of the committee are defined, and specific contributions are required).

Informal (‘non-verifiable’) work-related CPE

Informal work-related CPE, or ‘non-verifiable’ CPE, refers to other independent and informal activities associated with the individual’s work that contribute to their development. Informal CPE can include:

• reading technical or professional articles
• mentoring discussions and sharing knowledge and information at meetings
• participation in work-related committees
• internet research
• participation in activities associated with a professional association of which the individual is a member (not otherwise verifiable)
• volunteering if it helps to develop the individual’s social skills, capacity for leadership and/or project management skills, and
• engaging in an activity that develops the individual as a person (e.g. debating or a speech master program).

Individuals are expected to undertake more than one form of informal work-related CPE.

All CPE activities must be recorded. At least 30 hours of the required 120 hours for each three-year CPE period must be capable of being objectively verified by a competent source.

Means by which CPE can be verified

CPE can be verified by various means, including:

• attendance records
• independent assessment by a competent individual or professional association that a learning activity has occurred
• confirmation by an instructor, mentor, mentee or tutor of participation in a learning activity
• confirmation by an employer of participation in an in-house program, including the CPE logs of firms
• published research work and academic articles or journal article publications that are relevant to the individual’s current or future work, and
• confirmation by other committee members (or secretariat) of participation on a technical committee.

We will generally not accept evidence of mere enrolment in CPE activities to satisfy the criteria for verifiable CPE. Rather, evidence of attendance at the CPE activity is required.

Recording CPE

Registered liquidators must keep appropriate records of the CPE activities undertaken. These records must be provided to ASIC on request.

Only those hours that can be attributed to genuine learning (e.g. not breaks and entertainment sessions) should be recorded as CPE.

The registered liquidator’s CPE records need to include:

• details of the learning activity undertaken, including the topic
• whether the learning is verifiable or non-verifiable
• the date(s) on which the learning activity was undertaken
• the provider of the learning activity
• the number of CPE hours attributed to the learning activity, and
• confirmation of whether verifiable evidence of the learning activity undertaken is available for monitoring purposes.

We expect that internal training will not be considered as verifiable CPE unless:

• an attendance record is maintained
• the training is supported by formal learning materials, including a written paper or presentation of the information provided, and
• the session is presented by a competent presenter who has demonstrated knowledge of, and experience in, the topic.

We expect the individual will be able to provide a written record of CPE undertaken, including its relevance, if requested.

In addition to the CPE condition imposed on their registration as a liquidator, a registered liquidator may be subject to other CPE requirements imposed by professional bodies of which they are a member. To help monitor compliance with their various CPE obligations, registered liquidators may wish to maintain a central record of:

• all their CPE obligations, including details of the minimum hours of CPE that must be undertaken and the relevant period over which this must be completed, and
• all CPE activity they have undertaken.

When an individual is both a registered liquidator and a registered trustee, some CPE undertaken may be relevant to both registrations and may be considered more than once when determining whether the CPE condition on each of their registrations has been satisfied.

ASIC and the Australian Financial Security Authority (AFSA) expect that the CPE activities undertaken reflect the actual time spent by the individual on corporate and personal insolvency matters.

Further, ASIC and AFSA acknowledge that CPE undertaken may not reflect the actual time spent by the individual on corporate and personal insolvency matters – particularly when the choice of CPE undertaken is influenced by the need to develop awareness and understanding of legislative reforms occurring in either corporate or personal insolvency.

The individual must be able to establish that they have satisfied the CPE condition imposed on each of their registrations.

We may monitor an individual’s participation in CPE activities and will take appropriate regulatory action if necessary.

Monitoring compliance with CPE requirements

We may monitor an individual’s participation in CPE activities through:

• reviewing information provided in their Form 908 Annual liquidator return
• assessing compliance during normal surveillance and inspection activities, and
• reviewing the CPE records of a random selection of registered liquidators as part of an industry-wide compliance program to check that CPE obligations have been met.

Registered liquidators can expect we would request further information about their CPE activities before taking any regulatory action for potential non-compliance with the CPE condition(s) imposed on their registration.

Failure to comply with CPE requirements

A registered liquidator who forms a view they will be unable to comply with their CPE requirements should contact ASIC immediately and provide a written explanation of why they cannot satisfy the CPE condition(s) imposed on their registration.

A registered liquidator who fails to satisfy the CPE condition(s) imposed on their registration may be subject to disciplinary proceedings, including the issue of a ‘show-cause’ notice to give ASIC a written explanation of why they should continue to be registered.

Failure to provide a satisfactory response to a show-cause notice may result in a referral to a committee for the purpose of deciding one or more of the matters set out in section 40-55 of the Insolvency Practice Schedule in Schedule 2 to the Corporations Act 2001.

We will consider the following factors when determining the appropriate regulatory response:

• whether the registered liquidator has approached ASIC before the end of their three-year CPE period to advise why they have been unable to comply with their CPE requirements and the proposed action to remedy the non-compliance
• whether the individual is, or has been, on leave from professional duties for an extended period (e.g. parental or sabbatical leave)
• whether there is a physical disability that would preclude the individual from engaging in CPE activities, or that it would be unreasonable to require the person to do so
• the individual’s CPE record and conduct history, and
• any other relevant factors that would reasonably preclude the individual from complying with the CPE requirements.

For further information about the registration, discipline and insurance requirements of registered liquidators, see:

• RG 258 Registered liquidators: Registration, disciplinary actions and insurance requirements.