The Accountant in Bankruptcy
MAS Conference - 29th June 2012
Rosemary Winter-Scott | The AiB | June 2012
What our world like now
Consumer debt Debt management firms
Business closures Recession threatsNew forms of communication & advertisement…
Credit cards
..…easy access to
debt
Rosemary Winter-Scott | The AiB | June 2012
The impact in Scotland
Rosemary Winter-Scott | The AiB | June 2012
Developing a Vision for the 21st Century
A service for debt advice, debt management and debt relief which will:
• Ensure access to fair and just processes of debt relief and debt management
• Support the principle that those debtors who can pay should pay their debts
• Whilst acknowledging the wide range of circumstances and events that contribute towards bankruptcy for individuals and businesses
• Secure the best return for creditors – ensuring that the rights and needs of those in debt are balanced with the needs of creditors and businesses
Rosemary Winter-Scott | The AiB | June 2012
A “Financial Health Service”
Providing rehabilitation/repatriation of individuals and organisations in relation to their financial pressures
• The development and delivery of a range of products including for personal and sole traders/partnerships which recognise differences in terms of the level and cause of debt
• Different routes/products for individuals – which place different expectations on debtors and which encourages them to make appropriate contributions
• Debtors provided with appropriate advice and aware of the range of options
• An education role – seeking to impact on the culture and behaviours of individuals and prevent repeated financial issues
Rosemary Winter-Scott | The AiB | June 2012
A “Financial Health Service” continued
• A focus on individual responsibilities - with a greater emphasis on:– debtors through an agreement/contract between
debtors and the deliverers
– creditors in terms of responsible lending, active engagement and more differentiation of individuals credit rating
– Insolvency Practitioners in terms of seeking to help stamp out bad practice from debt management companies
– AiB to effectively regulate the service and ensure fair and effective delivery
• A research function - to better understand the triggers of debt, bankruptcy and insolvency and where preventative spend could have the greatest impact
Rosemary Winter-Scott | The AiB | June 2012
AiB as the ‘Hub’
AiBAiB
Strategic Overview
Centre of expertise and
knowledgeFacilitator
Independent and honest
broker
Gatekeeper
Efficient
Educator
Selective deliverer
Research function
Regulator (of regulators in an
independent Scotland)
Collaboration & consultation - with
stakeholdersInformation Provider
Rosemary Winter-Scott | The AiB | June 2012
Achieving the Vision
Minister for Energy, Enterprise and Tourism, Fergus Ewing MSP, said:
“We must address the problems associated with the financial crisis and recession wherever we can.”
“The world we live in today is quite different to that of 1985, when the last Scottish bankruptcy act came into force. This consultation considers the principles of bankruptcy and other debt management solutions and is one of the most ambitious and far-reaching reforms ever considered by both the Scottish Government and Accountant in Bankruptcy.
“It represents an excellent opportunity for members of the public and concerned parties to contribute towards the future landscape of bankruptcy law in Scotland. “
Rosemary Winter-Scott | The AiB | June 2012
Bankruptcy Law Reform Consultation
Key Principles within the consultation:• A range of new solutions/products for debt relief
and debt management• Ensuring debtors make a fair contribution• Integrating debt advice and education• A review of the court processes and preventing
debtors abusing the system• Strengthening the powers of AiB• A single financial assessment tool
Closed on 18th May 2012• Currently analysing the responses from • 129 responses including 89 organisations
Rosemary Winter-Scott | The AiB | June 2012
Vision Consultation – early indications
Advice • compulsory prior to access • through an approved adviser & not AiB• electronic “triage” system to signpost individualsApplication process • electronic but not excluding paper• should have evidence of advice – AI not needed• Intimation and moratoriumEducation • financial education integrated into debt relief options• not compulsory – but linked to certain criteriaFinancial assessment • a common tool to determine the level of debtor
contributions• a range of support for different approaches• assessed contribution deducted from wages
Rosemary Winter-Scott | The AiB | June 2012
Vision Consultation – early indications
The solutions - detailed work needed to analyse all responses - align debt levels for debtors and creditors access to
bankruptcy- DAS for small businesses- No income, no asset, low debt (NINALD) - Limited support for a greater range or complexity of
products - Maintain scope for transfer between products
The processes- contribution period (3 or 5 years?)- More regular dividend payments- Co-operation of debtor linked to discharge - could be
indefinite if absent debtor
Rosemary Winter-Scott | The AiB | June 2012
Vision Consultation – early indications
More general issues where there was debate:• AiB role and powers and• Reviewing court processes and preventing abuse of
the system• Excessive debt incurred prior to bankruptcy• Child maintenance debts – not survive bankruptcy• Credit union debts – not survive bankruptcy• Funding “asset-less bankruptcies” – Yes but who?
Rosemary Winter-Scott | The AiB | June 2012
Vision Consultation – early indications
Modernisation of legislation – to be fit for 21st Century
• Consolidation needed• Time frame for creditor claims• Clarify processes around recall• Electronic sederunt book • Optional payment holidays – but
equivalent delay to discharge• Changes to ROI
Rosemary Winter-Scott | The AiB | June 2012
Post Consultation
Over the summer• Ongoing review & analysis of the findings• Further discussion and debate with Ministers
Late summer• Publication of responses
Autumn and next year• Consideration of legislative options (and the need to
consolidate existing legislation)
Rosemary Winter-Scott | The AiB | June 2012
CAB adviser located in AiB
Ian Brough
Independent CAB Adviser
Located in AiB, 1 Pennyburn Road, Kilwinning
Contact number: 0300 200 2922
e-mail: [email protected]
Rosemary Winter-ScottThe Accountant in Bankruptcy & Agency Chief ExecutiveT: 0300 200 2901 E: [email protected]