We have had a good discussion on the Government’s final package of amendments to the bill, and I would like to think that the number of non-Government amendments suggests that, at the end of the process, we have arrived at an overall consensus on most things, even if we do not agree on everything.
I begin the final debate on the bill by thanking Murdo Fraser, the other members of the Economy, Energy and Tourism Committee, their clerking team and all of those who have assisted with Parliament’s scrutiny of the bill. I thank also my own officials and those in the Accountant in Bankruptcy’s office for their excellent, efficient and lengthy support during, and indeed before, the bill.
We as a Government, and my officials in particular, have appreciated the support of all of the stakeholder organisations that have engaged with us. It is a long list. Members will have noticed that there are very few tidying-up amendments, if I could call them that. Almost all of the amendments were introduced because the Institute of Chartered Accountants of Scotland, the Law Society of Scotland, Citizens Advice Scotland and the Sheriffs Association put forward points and made suggestions.
We had lengthy discussions with those organisations, before and after the introduction of the bill but especially during its passage. The bill is now in better shape, and I am extremely grateful to all of them for that. It is important that we listen to stakeholders, and I am particularly grateful for their support, advice and contributions throughout the passage of the bill.
I have already made it clear that there needs to be a balance in bankruptcy law between the interests of creditors and debtors. For creditors, we stand by the principle that, when the debtor is able to pay something towards the cost of their bankruptcy, they should do so. Creditors have a right to expect a reasonable return. The effect of bad debt on creditors, particularly small businesses, can be extremely serious. We need to bear that in mind in striking that balance.
When someone is able to make a contribution, we have extended the payment period from 36 to 48 months. As I alluded to in the debate on group 4, the Accountant in Bankruptcy’s analysis has indicated that that move should give rise to an improved return for creditors. That is what common sense would suggest. After all, if people pay for three years, broadly speaking they will pay for four years. That is the lesson that we learned from other vehicles, and I see no reason why it should not apply in this case. However, I was happy to give the assurance to Mr Fraser that he reasonably sought. The Accountant in Bankruptcy will monitor things closely.
As we move towards the final stage of the passage of the bill, I hope that all members will accept the critical point that a contribution is paid in less than a third of all bankruptcy cases. Only one third of the people who are bankrupt in Scotland will pay anything at all. The most financially vulnerable debtors will not be required to make any contribution. Those whose sole income derives from benefits will not pay a contribution. They should not, they cannot and they will not. It is incumbent on me to set that out extremely clearly. Credit unions have welcomed that change, and I have had positive discussions with the British Bankers Association and representatives of high street banks. Lloyds Banking Group has confirmed to me this week that it
“should be able to support the provision”.
On the debtors’ side, as well as mandatory advice we will introduce a new minimal asset process—or MAP—which will deliver quicker, more efficient debt relief to debtors who need it most, at half the cost. If I may say so—this is not in the script—it is a tribute to the efficiency of the Accountant in Bankruptcy and her staff in Kilwinning that they are able so efficiently to conduct their business that they do so at a cost of £100 per case. That indicates a diligence, devotion and ability that we should all appreciate from public servants who do a terrific job. Indeed, in the next couple of weeks I will have the pleasure of visiting once again the staff in the Kilwinning office formally to thank them for their work.
As well as the MAP, we will introduce a new common financial tool for Scotland, which will deliver, for the first time, a consistent determination of the amount that the debtor can pay. Up to now, various calculations have been applied. That simply cannot be right. I cannot overestimate the importance of this point: up until now, there has been no clarity or consistency in the various types of statutory solution that debtors enter. Those who enter the debt arrangement scheme, sequestration or protected trust deeds will pay contributions when they can, but there has been no consistency. Surely that is wrong. It is not an easy thing to devise a common financial tool that is fair to everybody, but it has already been done, and we will work hard to bring forward clear proposals on this matter and debate them in Parliament in due course.
There is more that we can do with the common financial tool. For example, we have been discussing with members of our common financial tool working group and the Money Advice Trust whether we can—as I mentioned earlier—build a small allowance for savings into the determinations.
The bill is aiming to assist financial rehabilitation, and members will have heard me refer previously to the Government’s vision for a financial health service. The passing of the bill today will mark a major milestone on the road to making that vision a reality. We need such a service to build the financial capability of people in Scotland, and, by working with organisations such as church groups and credit unions, we will help to support people to make better financial choices and prevent future problem debt.
We want our financial health service to act on behalf of the people of Scotland and to put the case to credit reference agencies that there should be more differentiation in credit risk scoring between people who have taken steps towards repaying their debts and those who have not. For example, credit reference agencies appear to give no recognition to those who are paying their debts under the debt arrangement schemes. That is plainly wrong, and we are working with the BBA to see whether it is possible to put it right.
In addition, we believe that banks should play their part to allow accounts to be opened or to remain open, which can enable debtors to benefit from things such as lower charges for household fuel, and by delivering specific products. If one has a bank account, as members know, one has access to discounts through paying bills by direct debit, for example. If banks do not allow undischarged debtors to have a credit-only account, those debtors cannot access the discounts that others can, and that cannot be fair.
The provisions in the bill are designed to tackle that issue and to act as a counterpart to the provisions that have been introduced down south. That is a worthy purpose, and we look forward to continuing to work with the BBA and individual banks, not least because, according to the CAB, only Barclays generally allows such a service at present. We hope that all the banks will follow that example.
We will have a financial health service that brings together different strands and sources of information and advice so that anybody with a concern or an issue to do with debt or borrowing can find, in one place, the help and assistance that they need. To that end, I can announce that the website of the Accountant in Bankruptcy will be rebranded in the autumn to become the website for, and a portal to, Scotland’s financial health service.
The Bankruptcy and Debt Advice (Scotland) Bill is not the end of the process, but a new beginning. The financial health service will soon be a visible reality, and bankruptcy will be no longer just about accounting after the fact but about prevention before the fact. Debtors will be better advised, informed and supported. The changes in the bill are commendable and, more than that, they are essential. I invite all members to support them and to support the bill.
I move,
That the Parliament agrees that the Bankruptcy and Debt Advice (Scotland) Bill be passed.
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