ICAS responds to call for view of Protected Trust Deeds
At the end of November 2019, the Scottish Parliament’s Economy, Energy and Fair Work Committee (EEFWC) sought views as part of its inquiry into PTDs. This followed on from concerns raised during its scrutiny of the Debt Arrangement Scheme (Scotland) Regulations 2019.
Responding to the inquiry, ICAS acknowledges concern among stakeholders surrounding the marketing and promotion of PTDs. However, notes that it is less clear that there is evidence of widespread consumer harm as a result of any empirical evidence which supports the view that PTDs are being routinely ‘mis-sold’.
PTDs are an important debt solution which provide individuals with a practical way to resolve their personal financial and problem debt difficulties and may be a better solution for them than options such as bankruptcy, which can carry greater obligations and restrictions. Correctly or wrongly, the very mention of PTDs has become toxic and, in the fog of bad publicity, the important and useful role that they play in the personal insolvency landscape is largely being forgotten.
ICAS notes the various steps taken by the insolvency profession, in conjunction with the Insolvency Service, to respond to the changes in the structure of the personal insolvency market. These steps include changes to the monitoring regime for volume providers, changes to the Code of Ethics applicable to insolvency practitioners and changes to Statements of Insolvency Practice.
ICAS supports further discussion with the FCA and UK Government surrounding the authorisation requirements in respect of the regulated consumer credit activities of debt counselling and debt adjusting. ICAS believes there is a requirement to extend the insolvency exemption for these regulated activities when carried out by insolvency practitioners beyond the current exemption which is restricted to situations where the insolvency practitioner is acting in reasonable contemplation of an appointment. This would allow firms without relevant FCA permissions, but who are otherwise regulated, to provide the full suite of debt solutions and remove any commercial incentive to favour PTDs as a remedy over DAS.
ICAS is pleased to note that the recent evidence sessions of the EEFWC resulted in a commitment by Jamie Hepburn, Minister for Business, Fair Work and Skills, to an overarching and wide-ranging review of the personal insolvency landscape in Scotland. Whatever the outcome of this inquiry, ICAS would strongly advocate for a wholesale review of debt solutions.
The call for written views closed on 6 January 2020. David Menzies from ICAS will be taking part in an evidence session of the EEFWC on 21 January 2020. The session will be broadcast on Scottish Parliament TV.