The Accountant in Bankruptcy

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


The impact in Scotland


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


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


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


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


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. “


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


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



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



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?



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


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)


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]

mailto:[email protected]

The Accountant in Bankruptcy

Documents

Transcript of The Accountant in Bankruptcy