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Bankruptcy Law Reform: Common Financial Tool

Bankruptcy Law Reform: Common Financial Tool. Pamela Kellock-Shetty: AiB, Policy Development Team Leader. Common Financial Tool. Bankruptcy Law Reform consultation proposed a single financial tool to ensure consistency in assessment of debtors’ income and expenditure.

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Bankruptcy Law Reform: Common Financial Tool

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  1. Bankruptcy Law Reform: Common Financial Tool Pamela Kellock-Shetty: AiB, Policy Development Team Leader

  2. Common Financial Tool • Bankruptcy Law Reform consultation proposed a single financial tool to ensure consistency in assessment of debtors’ income and expenditure. • Common Financial Tool Working Group (CFTWG) was set up to consider existing tools or Scottish-specific. • CFTWG supported recommendation for CFS to become the single tool in Scotland. • The Bankruptcy and Debt Advice (Scotland) Act 2014 gives Scottish Ministers power to specify a common financial tool. • CFT regulations will provide the detail of the tool and how it will operate i.e. CFS.

  3. Common Financial Tool regulations • All money advisers will be required to use the CFT with clients to assess surplus income prior to entry into a statutory debt solution. • Money advisers must verify income and expenditure and confirm debts. • Debtor’s contribution will be the surplus income identified using the CFT. • No contribution will be taken where the debtor’s sole income is derived from welfare benefits. • The CFT must be used to re-assess surplus income where debtor is seeking variation or payment break. • AiB will undertake a programme of random annual audits to monitor the use of CFT. • AiB are considering how a provision for savings can be included in the regulations.

  4. Next steps • Scottish Common Financial Tool Working Group will meet to discuss draft regulations and guidance in July 2014. • Future SCFTWG meetings will take place during rest of year to develop scenarios and CFT guidance. • Common Financial Tool Regulations will be introduced to Scottish Parliament later this year and will be commenced by April 2015. • AiB representation on CFS Client Support Steering Group (CSSG). • Monitor progress on UK discussions on single income and expenditure statement (based on CFS format, principles and trigger figures). • The new ‘CFS-Plus’ will improve the CFS including revising categories and allowing for savings provision.

  5. Pamela Kellock-Shetty, Policy Development Team Leader 0300 200 2694, pamela.kellock-shetty@aib.gsi.gov.uk THANK YOU 1 PENNYBURN ROAD, KILWINNING, AYRSHIRE, KA13 6SA T 0300 200 2600 F 0300 200 2601 W WWW.AIB.GOV.UK

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