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. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  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. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

AiB Response to Debt Arrangement Scheme consultation published

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

24 April 2019

Main points

  • The Accountant in Bankruptcy has proposed several changes to DAS following its latest consultation exercise last year.
  • Major changes proposed to payment distribution process and fee structure.
  • Further changes are aimed at reducing bureaucracy and improving flexibility.

The Accountant in Bankruptcy has published a response to the ‘Building a Better Debt Arrangement Scheme’ consultation which launched on 31 October 2018. Steven Wood considers the amendments proposed.

The Accountant in Bankruptcy (AiB) has published a response to the latest DAS consultation carried out last year. The consultation followed on from the changes made as a result of The Debt Arrangement Scheme (Scotland) Amendment Regulations 2018, which came into force on 29 October 2018.

The consultation had the stated intention of making DAS more attractive and sustainable for money advisers, both in the free and fee-charging sector. It broadly focused on four areas:

  • proposed changed to DAS payments distribution;
  • a new fee structure;
  • reducing bureaucracy; and
  • improved flexibility.

Proposed changes to DAS payments distribution

The AiB will recommend to Ministers that the Continuing Money Adviser (CMA) role be extended to include payments distribution responsibility. During the consultation, 74% of respondents agreed with this proposal. ICAS broadly welcome this change, although reiterate concerns over potentially restricted market competition in view of the requirement for FCA authorisation.

The AiB also intend to recommend to Ministers that they be allowed to offer a payments distribution service. The debtor will be able to nominate their own payment distributor (PD) where the PD holds the relevant FCA permissions. Where no PD is nominated in a case, AiB will effectively be appointed as PD by default. The AiB will also offer the PD function for cases where an existing PD ceases or is unable to act.

Although pleased to note that the AiB will not act as PD in all cases, ICAS remain concerned that this additional function will create a further conflict of interest for the AiB, is anti-competitive and without justification in the public interest.

New fee structure

The consultation proposed changes to the DAS fee structure, extending the statutory PD fees to cover the full range of services offered by a CMA (by removing all existing CMA fees and instead including initial set up costs, administrative duties and payments distribution services) under one fee.

Despite most respondents favouring a fee level of 15%, the AiB will take forward recommendations to Ministers for legislation to set the statutory administration fee for CMAs at 20%. The AiB have put particular weight behind creditor responses, with 54% of that group favouring a fee level of 20%.

ICAS believes that this change further alters the nature of DAS and makes it more explicitly simply an alternative insolvency solution or form of composition. Creditors are now being asked to bear the full cost of the programme in the same way as they would in a trust deed or bankruptcy. Unsurprisingly, the AiB say they disagree with this point of view as the debtor repays their debts in full. This ignores that insolvency can be demonstrated by being unable to pay debts as they fall due.

Reducing bureaucracy

The consultation put forward the suggestion that Debt Payment Programme (DPP) proposals should be approved automatically if the debt due to objecting creditors is less than a specified percentage of the total debt.

98% of respondents agreed with this suggestion, however, there is no clear consensus on the level of creditor objection which should prevent a DPP being approved automatically. As a result, the AiB propose to put recommendations to Ministers that a DPP is automatically approved if the proportion of total debt held by dissenting creditors is less than 10%. Due to significant support for the trigger point being higher (two-fifths of respondents favoured 20% or more) this will be kept under review.

Due to the overwhelming agreement of respondents, the AiB will take forward recommendations to Ministers that deemed creditor consent should be introduced for DPP variations, and that variation proposals which will lead to a reduction in the duration of the DPP should be approved automatically by the DAS Administrator.

The AiB will also recommend that the AiB should be able to submit variations on behalf of the debtor in specific circumstances, if the money adviser is unavailable to do this and where the variation will reduce the term of the DPP. The AiB have clarified that the policy intention behind this change is that any variations submitted by AiB would be for purely administrative purposes – such as removing a debt which has been cleared – and would not involve any variation based on a change in the debtor’s financial circumstances.

Improved flexibility

The consultation sought views on the potential introduction of a new type of variation to address situations where debtors experience a short-term financial crisis.

Respondents agreed that short-term breaks should be introduced to address periods of crisis, with 94% of respondents agreeing that money advisers should be responsible for authorising the proposed short-term breaks without having to consult creditors. These changes will, therefore, be taken forward by the AiB.

There was less consensus about how many short-term crisis payment breaks should be available each year. The AiB intends to recommend that there should be no more than two breaks, each lasting one month.

Next steps

Subject to ministerial approval, the proposals will be brought forward in secondary legislation which the AiB have indicated they would hope to lay in the Scottish Parliament before the summer. It can be anticipated therefore that any new legislation approved by the Scottish Parliament could become effective as early as late Autumn 2019.

2022-01-xero 2022-01-xero
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

Accreditations

  • ISO 9001 - RGB (opens new window)
© 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: