The Common Financial Tool etc. (Scotland) Regulations 2014
Citation and commencementF11.
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InterpretationF12.
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Common Financial Tool
Common financial toolF13.
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Common financial tool: contingency allowanceF13A.
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Common financial tool: supporting statements and evidenceF14.
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Money Advice Trust licence requirements: reportF15.
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Protected Trust Deeds
Amendments to Protected Trust Deeds (Scotland) Regulations 20136.
Common Financial Tool: consequential amendments7.
(1)
““common financial tool” has the meaning given by section 5D(1) of the 1985 Act;”.
(2)
In regulation 7(1)(c) (statements in relation to trust deed) after “benefit of creditors” insert “, including any contribution required by the common financial tool where the debtor is a living individual,”.
(3)
In regulation 8 (payment of debtor’s contribution)—
(a)
at the end of paragraph (1), insert “, as required by the common financial tool where the debtor is a living individual”; and
(b)
in paragraph (5), for “paragraph (4)” substitute “paragraphs (1) and (4)”.
(4)
In regulation 10(1)(d)(ii) (documents to be sent to creditors), for “in the style and format of the Common Financial Statement” substitute “, in Form 2A where the debtor is a living individual”.
(5)
F2“(h)
where a debtor who is a living individual makes a contribution from income,—
(i)
a statement that the amount of that contribution is in accordance with the common financial tool as assessed by the trustee; and
(ii)
any evidence or explanation required in applying the common financial tool.”
(6)
“(c)
the Accountant is satisfied in accordance with the common financial tool with the amount of the contribution determined.”.
Administration8.
(1)
F3“(2A)
If the trustee receives within 21 days after the date on which the Form 4 was sent notification in writing from—
(a)
a majority in number; or
(b)
not less than one third in value,
of creditors that they object to the recommended course of action in the Form 4 where the expected final dividend to ordinary creditors is 20% lower than the expected dividend to ordinary creditors set out in the Form 3, the trustee must request a direction under regulation 19(3) as to how the trust must be administered.”.
(2)
In regulation 23(3)(a) (approval of increase in fixed fee), for “majority in number” substitute “majority in value”.
(3)
In regulation 24(8) (refusal of trustee to apply for debtor’s discharge), for “at the end of the period of 48 months beginning with the day on which the trust deed was granted” substitute “as soon as reasonably practicable after the end of the period for which payments are required under the trust deed”.
Remuneration for outlays before grant of trust deed9.
At the end of regulation 23(1)(c) (remuneration to which trustee entitled), insert “or before that date on a single valuation of F4any item of the debtor’s heritable estate specified or valued in such a valuation”.
Minor amendments10.
(1)
In regulation 19(5) (directions to trustee under protected trust deed: period of compliance), for “regulation 27(1)(b)” substitute “regulation 27(1)(c)”.
(2)
In regulation 23(1) (remuneration to which trustee entitled) after “consist” insert “only”.
(3)
(4)
In regulation 24(5) (discharge of debtor), after “later” insert “than”.
(5)
In the Schedule (forms to be used in connection with protected trust deeds)—
(a)
“2A
Income and expenditure
Regulation 10(1)(d)(ii)”;
(b)
after Form 2 insert Form 2A set out in the Schedule to these Regulations; and
(c)
for—
(i)
Form 3 (trust deed protection proposal);
(ii)
Form 4 (trustee’s statement of status of a protected trust deed);
(iii)
Form 6 (application to creditors for discharge of trustee); and
(iv)
Form 7 (trustee statement of realisation and distribution),
substitute respectively Forms 3, 4, 6 and 7 set out in the Schedule to these Regulations.
Trust deeds granted before 1st April 2015F511.
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St Andrew’s House,
Edinburgh
SCHEDULEForms
These Regulations make provision about the method for determining an appropriate amount of a living debtor’s income to be paid to a trustee after sequestration of the debtor’s estate, known as the “common financial tool” in the Bankruptcy (Scotland) Act 1985 (“the 1985 Act”), as amended by the Bankruptcy and Debt Advice (Scotland) Act 2014.
The Regulations also make a number of other amendments to related legislation in the Protected Trust Deeds (Scotland) Regulations 2013 (“the PTD Regulations”).
The common financial tool is to be used in making debtor contribution orders under sections 32A to 32H of the 1985 Act, which fix the contribution which a debtor must pay from income received after sequestration for the benefit of creditors. Those orders replace income payment orders under section 32(2) of the 1985 Act. The common financial tool may also be taken into account on variation of an income payment order, though the sheriff may have regard to other factors too.
Regulations 3 and 4 provide for the common financial tool, providing for how income and expenditure of the debt is established by reference principally to the Common Financial Statement published by the Money Advice Trust (the “CFS”).
The debtor’s surplus income in excess of the lower of the debtor’s expenditure, or the “trigger figures” which are part of the CFS for a reasonable amount of expenditure is the basis of the contribution, and an amount of reasonable expenditure may be allowed to the debtor which exceeds those trigger figures. Guidance is also to be set out by the Accountant in Bankruptcy on types of income and expenditure, verifying income and expenditure and money advisers’ functions.
Supporting statements, explanation and evidence is required (regulation 4). The Accountant in Bankruptcy can in some cases related to debtor applications notify the Money Advice Trust where it appears money advisers have breached licence restrictions (regulation 5).
Regulations 6 to 10 make changes to the PTD Regulations arrangements to protect debtors entering into trust deed arrangements with their creditors from other creditors. Consequential changes are made for the introduction of the common financial tool under the powers in paragraph 5 of Schedule 5 to the 1985 Act (regulation 7), building on the fact that the PTD Regulations already require users to use the Common Financial Statement.
Other miscellaneous and minor amendments are made to the PTD Regulations, including to require trustees to seek a direction from the Accountant in Bankruptcy where creditors object to a recommended course of action where a trustee proposes a lower dividend in Form 4 submitted under the PTD Regulations (regulation 8(1)). A single valuation of specified heritable estate before a trust deed was granted is allowed as an outlay of the trust deed (regulation 9).
These Regulations do not apply to trust deeds granted before 1st April 2015 (regulation 11).
A Business and Regulatory Impact Assessment has been prepared for these Regulations. Copies can be obtained from the Accountant in Bankruptcy’s website: http://www.aib.gov.uk.