Damien Grant: The spotlight's shining on me

Auckland city. Photo / Richard Robinson

Last week I wrote about holding ourselves to account for past failings and spoke of mistakes I have made in my past. Helpfully, the National Business Review this week detailed in technicolour some of those mistakes, specifically that in my early-20s I spent just over a year in prison for dishonesty.

It's well behind me but it's relevant because proposed new legislation in my industry could preclude people like me from practicing insolvency.

The insolvency profession is being regulated. At present, virtually anyone over 18 can take a liquidation. The only exceptions are those who are creditors of the business, or people who are bankrupt.

The first draft of the proposed law allowed for the Registrar of Companies to ban some individuals from acting as liquidators. The new draft is more onerous and sets a registration regime in place, but falls short of full regulation.

Like many in the industry, I would prefer a more comprehensive regulatory environment in which practitioners were required to demonstrate competence.

In Australia the industry is regulated by ASIC, the equivalent of our newly minted Financial Markets Authority. People must demonstrate they have a relevant tertiary qualification and have spent five of the past 10 years working for a licensed insolvency practitioner.

I am in favour of a similar system here, but given the costs involved I understand the Ministry of Economic Development's motivation in proposing a more light-handed approach.

Insolvency is a small industry. According to the Ministry, only 51 of us took more than 20 appointments last year, yet there were more than 100 people who took a single liquidation in that year.

Some of those who practice insolvency know too little about its complexities. It is easy for inexperienced professionals to take an appointment. Worse, it is too easy for a company to appoint a "friendly" liquidator when they get into trouble.

The new bill also provides automatic disqualification for individuals who have been expelled from professional bodies or have convictions for dishonesty. It forces such people to apply to the High Court before registering.

I support this, although it's clear my support is influenced by my history. Having this judicial discretion will preclude people who should be precluded. But it also allows for an objective review of a person's character, rather than a one-strike-and-you're-out regime.

My failure was one of character and personal integrity. People who do not understand the drivers of their own mistakes are doomed to repeat them. My lesson was not to be smarter, but to approach life and myself differently.

* damien@waterstone.co.nz