Insolvency law’s limits on the disciplinary powers of professional regulators: an update from Canada

Professional regulatory bodies can be empowered to suspend a regulated member’s licence, pending payment of a fine or costs award made against the member. Previous case law from the Alberta Court of Appeal suggested that a regulated member could not avoid this manner of licence suspension by making use of insolvency proceedings. This precedent appears to have been overtaken by two recent Supreme Court of Canada (‘SCC’) decisions. These recent decisions on insolvency law limit the ability of professional regulatory bodies, including legal regulators, to discipline their members. The cases – Alberta (Attorney General) v Moloney (‘Moloney’) and 407 ETR Concession Co v Canada (Superintendent of Bankruptcy) (‘407 ETR’) – involved licence suspension provisions, which allow regulators to deny an individual the benefit of a licence until the individual pays a specified debt. The SCC was asked whether a regulator could continue such a suspension once the underlying debt had been discharged (that is, released) in bankruptcy. The SCC answered ‘no’. This update describes the prior precedent, how it has been overtaken by the 2015 SCC decisions and how Canadian professional regulatory bodies can continue to protect the public and maintain the integrity of their professions within the constraints set by insolvency law.