ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Professional development
    6. CA Wellbeing
    7. Mentoring
    8. Member rewards
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. Proud to be a CA
    15. ICAS podcast
    16. Newly admitted members 2022
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight series 2022
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Charities
    5. Coronavirus
    6. Corporate and financial reporting
    7. Business and governance
    8. Ethics
    9. Insolvency
    10. ICAS Research
    11. Pensions
    12. Practice
    13. Public sector
    14. Sustainability
    15. Tax
  11. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  12. CA jobs
    1. Hays | A Trusted ICAS CA Jobs Partner
    2. CA jobs partner: Rutherford Cross
    3. Resources for your job search
    4. Advertise with CA jobs
    5. Director of Finance and Company Secretary | Glasgow
    6. Hays | A Trusted ICAS CA Jobs Partner
  13. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  14. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

A summary of the Scottish Government’s response to the public consultation on the review of the Bankruptcy and Debt Advice (Scotland) Act 2014

  • LinkedIn (opens new window)
  • Twitter (opens new window)
Steven Wood By Steven Wood, Practice Support Specialist (Insolvency)

19 October 2020

  • The Scottish Government has published its report in response to last year’s public consultation on the review of the Bankruptcy and Debt Advice (Scotland) Act 2014.
  • The wider review of Scottish debt solutions has commenced and the responses to the consultation will inform that review.
  • Significant change is unlikely in the short term due to pressures on the legislative timetable both from the coronavirus pandemic and Brexit.

The Scottish Government has published its report in response to last year’s public consultation on the review of the Bankruptcy and Debt Advice (Scotland) Act 2014. Steven Wood takes a look at the key findings from the report.

Background

On 1 April 2015 the Bankruptcy and Debt Advice Scotland Act 2014 (“BADAS”) came into force and introduced some significant reforms to the bankruptcy process in Scotland.

The Scottish Government undertook a consultation on the BADAS reforms after a reasonable period of time had elapsed to allow the changed processes to become established. That consultation closed on 11 February 2020, but the publication of the report was delayed due to the Scottish Government’s response to the coronavirus pandemic.

41 responses were received from stakeholders, including ICAS, on the changes introduced in 2015

The consultation concentrated on the areas introduced by BADAS that had been highlighted as needing some improvement, and these are looked at in turn below.

Statutory moratorium on diligence

Most respondents do not believe the current 6-week moratorium period is sufficient, with half of those responding believing a 12-week period would be more appropriate.

Two-thirds of respondents believe that interest, fees and charges should be frozen during the moratorium period.

The Scottish Government will therefore give further consideration to an extension of the moratorium period and a freeze on interest, fees and charges during that period.

More work will be undertaken to consider the practical application of introducing further provisions which are currently reserved and the additional protections for those receiving mental health crisis care, which received widespread support from respondents.

Common financial tool

97% of respondents believe that the provision of a common financial tool within insolvency legislation remains appropriate. However, the question of what form that tool should take is less clear.

57% of respondents believe the currently used Common Financial Statement (CFS) is the most appropriate tool, 18% believe it should be the Standard Financial Statement (SFS) and 25% believe it should be some form of alternative.

This is clearly a contentious area, with the Accountant in Bankruptcy twice failing to obtain the Scottish Parliament’s approval to replace the CFS with the SFS, now used elsewhere in the UK, as the common financial tool of choice for Scottish statutory debt solutions.

The consultation report demonstrates a range of opinions over the issue of a reasonable standard of living, with a possible minimum expenditure level being considered as well as a maximum level, and it will not be straightforward for the Scottish Government to find a solution that satisifes all stakeholders.

Debtor contribution order

The vast majority (74%) of respondents do not believe the current timescales for trustees to submit their contribution proposals to the Accountant in Bankruptcy is sufficient. This is mainly due to actions outwith the trustee’s control which impact on their ability to meet the 6-week timescale.
The Scottish Government will consider extending the time allowed for trustees to submit their contribution proposals to 12 weeks.

Minimal asset process (MAP) bankruptcy

The vast majority of respondents do not believe the minimum debt levels should be increased in a MAP bankruptcy, full administration bankruptcy or a creditor petition bankruptcy. Similarly, the majority of respondents do not believe the asset levels for MAP applications should be increased.

Most respondents also consider that a debt ceiling should be retained in MAP bankruptcy, with almost two-thirds suggesting that the ceiling should be set at £20,000.

Financial education

While most respondents to the consultation agree that intention to address financial education is a positive step, there is less consensus on whether the current content of the financial education modules meets the stated policy intention of promoting financial capability.

A number of respondents queried whether during bankruptcy is the appropriate time for financial education to be administered.

Other matters

The consultation sought views on two additional areas:

  • Discharge of child maintenance debts. This is clearly a very emotive issue. However, around two-thirds of those who responded believe child maintenance arrears should continue to be discharged following the conclusion of bankruptcy or protected trust deeds, so that these solutions continue to provide debt relief and a ‘fresh start’ for individuals.
  • Rate of interest. Almost all respondents do not believe the current interest rate for either dividends in bankruptcy or the judicial rate are set at the correct level. Most respondents believe the rate of interest should be either the Bank of England base rate or the Bank of England base rate plus 2%.

Further steps

The Scottish Government has committed to a wider review of Scottish debt solutions, and that work has now commenced. Full consideration will be given to the feedback and comments given by respondents, to help inform future changes to bankruptcy as part of that review.

However, there will be a wide range of opinions on the direction that review should take and there are no straightforward solutions to many of the issues raised as part of the consultation.

With Scottish Parliamentary elections due in May 2021, and pressures on the legislative timetable both from the coronavirus pandemic and Brexit, any significant changes to primary legislation seem highly unlikely in the short term.

However, there are limited but useful changes which may be made through secondary legislation in the meantime in relation to matters where widespread support was demonstrated through the consultation. Specifically, building in an extended time period to the moratorium on diligence for those undergoing mental health crisis treatment and the amendment of the statutory rate of interest.
.

2022 06 pb 2022 06 pb
ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: