iscover Spotlighting risk-based regulation
BusinessRegulation is sometimes dismissed as “red tape” – a brake on growth and innovation. In reality, its purpose is to protect and safeguard confidence in the system and those who rely on it.
The Australian Financial Security Authority (AFSA) regulates practitioners in the personal insolvency system, trustees and debt agreement administrators who support Australians in financial distress. In 2024–25, 12,257 people entered personal insolvency, nearly half with debts under $50,000. For most, insolvency is a safety net, offering a fresh start.
Our role is to ensure the system works as intended: enabling financial reset while protecting creditors and preventing exploitation. It is impossible to regulate for every eventuality. Instead, AFSA applies risk-based regulation, targeting behaviours that cause the greatest harm.
This approach underpins our Regulatory Action Statement, which prioritises four key harms, including misuse of personal insolvency agreements (PIAs). While PIAs can be appropriate, some parties exploit them to the detriment of creditors and system integrity.
The recent John Adgemis case is a stark example: creditors were offered 0.15 cents on the dollar, and meetings were manipulated with false or “friendly” creditors. AFSA acted decisively, with proportionate action, to protect confidence. It was through cross-system stewardship that this action was able to be brought.
Risk-based regulation allows legitimate activity to proceed with minimal friction. But regulation alone doesn’t build trust. Trust comes from a culture of shared stewardship across the system. Practitioners, creditors, debtors and advisors all have a role to act ethically, report misconduct and “swim between the flags”. When that happens, regulators adopt a lighter touch.
As we enter 2026, I encourage you to reflect on the purpose of regulation and your responsibility as trusted advisers to those who need it most. Stewardship isn’t optional; it’s essential to system integrity.
