Common Financial Tool Notes for Guidance updated
By Steven Wood, Practice Support Specialist (Insolvency)
14 May 2019
Revised Common Financial Tool Notes for Guidance have been published on the AiB’s website. Steven Wood takes a look at the amendments.
Following concerns raised by the Scottish Parliament’s Economy Jobs and Fair Work Committee when considering the draft Common Financial Tool (Scotland) Regulations 2018, it was announced in February that the Common Financial Statement would remain as the Common Financial Tool (CFT) for 2019/20, with updated spending guidelines applied from 1 April 2019.
Following on from this, and in conjunction with the CFT working group, the AiB have revised their CFT Notes for Guidance. The key amendments include:
- New sections (1.11-1.15) have been inserted into the guidance in recognition that situations arise where it is not possible to evidence fully a debtor’s income and expenditure as part of a debtor’s bankruptcy application. Information is requested to be included within the application to explain the debtor’s circumstances, avoiding the need for further investigations and allowing more applications to be processed without delay.
- If it is not possible to evidence fully a debtor’s income and expenditure, the Debtor Contribution Order will be set at the appropriate level based on the information available at the point the application is processed. Post-award checks will be undertaken to seek additional evidence/explanation.
- AiB staff will now telephone money advisers, instead of issuing letters, when further information is required, with a view to speeding up the process.
- Section 3.2 is amended to clarify that the reference to ‘income’ is to the debtor’s current income.
- Section 6.4 is amended as a result of feedback regarding fuel poverty and individuals not spending sufficient funds on gas and electricity when struggling with their finances. In response, the AiB will not require evidence if the total utilities spend does not exceed £120.
- Section 6.5 is expanded in acknowledgement that some councils may suspend a debtor’s right to pay their council tax by instalments if the debtor is made bankrupt or grants a trust deed. This is applied inconsistently in practice across the various local authorities. If this happens the council will submit a claim for the full year and the debtor’s DCO will need to be varied if council tax was originally included as an item of expenditure.
- Appendix A is amended to update both the categories of income from which a contribution can be taken and the list of non-deductible state benefits from which a contribution cannot be taken.
Minutes of the CFT working group meetings are published on the AiB’s website.
While the changes are broadly welcomed and will go some way to reducing the administrative burden of operating the CFT, ICAS still believes that further efficiencies around evidence provision to the AiB can be made. Ultimately, ICAS remains of the view that the CFT requires to be radically overhauled. This should involve moving to a different basis of operation involving a minimum income model which is progressive and transparent whilst being non-judgemental on expenditure choices of debtors.