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Vital next step in development of Scotland’s Financial Health Service

A set of regulations which will encourage debtors to save as part of their financial rehabilitation and help them with sustainable repayment plans have been laid before the Scottish Parliament yesterday (Thursday, February 19).

The Common Financial Tool etc. (Scotland) Amendment Regulations 2015 introduce measures designed to help people with debt - as well as their creditors and advisors – better manage their financial situation.

Following the regulations having effect from 1 April with the arrangements to implement last year’s Bankruptcy and Debt Advice (Scotland) Act, debtors will be able to retain an allowance, within limits, from their regular income to put towards meeting any contingencies which may arise.

While it has been introduced to act as a safety net in case of emergencies, it is hoped the measure will also encourage individuals to continue saving once they are free from debt and build financial resilience into their long term financial planning.

Business Minister Fergus Ewing said: “These regulations form an important next step towards the vision of a financial health service for Scotland.

“Once again, Scotland is showing the way forward by seeking to promote financial and lifestyle rehabilitation for people with problem debts, allowing them to meet their obligations in a dignified manner and break the cycle of debt once and for all.

“The Scotland’s Financial Health Service web portal has already offered guidance to thousands of people with money worries and these regulations build upon the foundation created by the service.

“Taken as a whole, these measures have been welcomed by the money advice community as well as by other financial commentators as offering a glimpse of financial civilisation for everyone in Scotland.”

Yvonne MacDermid, Chief Executive of Money Advice Scotland, welcomed the move. She said: “Money Advice Scotland fully supports and welcomes the introduction of a contingency allowance for consumers who are in statutory debt solutions.

“This not only assists people to access money when they require it, but should avoid costly borrowing.

“This approach is also consistent with building individuals’ financial capability to deal with issues as they occur.”

Susan McPhee, Head of Policy and Communications at Citizens Advice Scotland added: “The contingency allowance is a sensible step which will allow those paying off debts to be able to save a small amount of money each month towards any unforeseen expenses that may occur.

“Citizens Advice Scotland has long argued that this is a necessary step as it can often be those emergency or unexpected expenses such as a car or household repair that can set someone back in their regular debt payments as they try to cope with that too.

“This new allowance will also help people get used to the idea of saving for emergencies in the future and at the end of their time paying off debts, if it hasn’t been needed for any contingency payments, is a good way of showing the advantages of saving regularly.”

Notes To Editors

These powers will see changes to:

• Advice and education
• Payments by debtor following sequestration
• Minimal Asset Process
• Moratorium on diligence
• Application process
• Administration of estate
• Discharge
• Records
• Functions of Sheriff and AiB
• Review of decisions by AiB

Scotland’s Financial Health Service www.scotlandsfinancialhealthservice.gov.uk is a one-stop shop for advice a range of money issues and signposts to organisations offering information and advice on debt, managing money, housing, homelessness and ethical lending. The Scotland’s Financial Health Service helpline is available by calling 0800 707 6696

Further information regarding insolvency in Scotland, including legislation, can be found on the Accountant in Bankruptcy’s website www.aib.gov.uk