The Accountant in Bankruptcy MAS Conference - 29 th June 2012

Rosemary Winter-Scott | The AiB | June 2012 What our world like now Consumer debt Debt management firms Business closures Recession threats New 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 21 st 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’ AiB Strategic Overview Centre of expertise and knowledge Facilitator Independent and honest broker Gatekeeper Efficient Educator Selective deliverer Research function Regulator (of regulators in an independent Scotland) Collaboration & consultation - with stakeholders Information 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 18 th 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 individuals Application process electronic but not excluding paper should have evidence of advice – AI not needed Intimation and moratorium Education financial education integrated into debt relief options not compulsory – but linked to certain criteria Financial 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 21 st 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:

Rosemary Winter-Scott The Accountant in Bankruptcy & Agency Chief Executive T: E: