The Australian insolvency system is dominated by debtors with relatively small debts, many of whom are vulnerable, the Australian Financial Security Authority says. According to AFSA data, there are 60,000 people in the personal insolvency system currently, with a total of A$18 billion of liabilities. Of those, 52.7 per cent have less than $50,000 of debts. AFSA chief executive Tim Beresford said: “So think about it, we are talking about someone with two credit cards and probably five to eight buy now pay later arrangements.” Debtors with debts between $50,000 and $100,000 make up 17.9 per cent of individuals in the insolvency system. Only a quarter of insolvent debtors have more than $100,000 in liabilities. Among creditors, the Australian Taxation Office and the big banks account for 35 per cent of the debt owing. Beresford said those five organisations have a big influence on the system. Speaking at the Financial Counselling Australia conference, Beresford said: “The Hayne royal commission impacted banking behaviour, which has impacted creditor behaviour more broadly.” Following the royal commission there was a marked decline in insolvency volumes. Beresford said that among those people in the system with relatively small debts there was a significant number experiencing hardship as a result of domestic violence, economic abuse, physical abuse and mental health issues. ASFA has recently launched a vulnerability framework that addresses non-compliance and exploitation by unscrupulous actors in the system. It is also stepping up its work with ASIC to stop system misuse. In a case this year, a debt agreement administrator, A&M Group (trading as Debt Negotiators), was fined for breaching the ASIC Act, after the Federal Court found that it harassed debtors and engaged in misleading and deceptive conduct in its management of debt agreements. Beresford said the case was a direct result of a tip-off AFSA received and passed on to ASIC.