DISTURBING evidence has emerged that some insolvency practitioners are, at best, extremely bad at their jobs or, at worst, misselling their services and fleecing the financially vulnerable. A report by the Govan Law Centre (GLC) found that, while the failure rate for helping clients discharge debt is 15 per cent across the industry, in some firms it is as high as 88 per cent;a staggering figure.

In each case, it means not only that protected trust deeds set up for clients have failed but also that their debt is worse because of fees charged over several years. It raises the question of whether clients were wilfully misadvised in the first place. Some, who thought they were clearing their debts, were only paying fees. This is not to deny that many firms provide viable insolvency solutions for clients. Some, indeed, have failure rates of zero per cent. But such variance in itself must set off alarm bells.

Behind the statistics are human tragedies. More than 150,000 Scots have been made insolvent since 2008. These were not necessarily financially irresponsible people. Illness, redundancy, divorce and bereavement are just some potential causes of financial difficulty.

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The GLC has called for dedicated specialist services and independent advisers to help people who get into dire straits and this should be given serious consideration. The Scottish Government, meanwhile, needs to reconsider protection for debtors’ homes and use its statutory powers to reduce the eight per cent charge in sequestrations and protected trust deeds. At a time of low interest rates, that is clearly too high.

There is also a strong case, as advocated by the GLC, for research into failure rates, more transparency in calculation of fees and a review of the regulatory and licensing framework for insolvency practitioners. At the very least, there is a need to remedy a situation in which the financially troubled end up worse off after seeking supposedly professional help.