ONE in four cases in a Scottish Government scheme that is intended to help people in debt may have to be revoked because of new rules that will soon be passed by the Scottish Parliament.
The new rules contained in the Debt Arrangement Scheme (Scotland) Amendment Regulations 2019, barely scraped through the Economy, Energy and Fair Work Committee of the Scottish Parliament last Tuesday (September 17) with five MSPs voting in favour and four opposing them.
Although many of the provisions in the new rules are to be welcomed, especially those that will mean anyone entering the Debt Arrangement Scheme after November 4 will not have to pay fees where they use a private firm, there are worrying gaps in the rules.
One of those gaps means that approximately 3,500-4,000 people already in the scheme with private firms will still have to keep paying fees, which can amount to thousands of pounds over the lifetime of a programme and can mean paying for years more than if they applied after November 4.
Unfortunately, despite having the powers to do so, the Scottish Government chose not to apply the new fee structure to existing cases, which means for thousands of people in programmes with private firms, the only way to take advantage of these new rules will mean having to stop paying their existing programme and wait for their case to be revoked, before re-applying.
The problem with this is, is it may mean their creditors could re-apply interest and charges to their debts.
To further complicate matters, rules by the UK Financial Regulator, regarding Treating Customers Fairly, may force private debt management firms to give this advice to their own clients. The Financial Conduct Authority requires firms to reviews cases on a case to case basis when something significant changes, including changes to the law. This is to ensure their clients are in still in the best option for them. When these new rules come into force, it may be many people’s existing debt payment programmes will not be the best option for them. In actual fact, the Accountant in Bankruptcy, Dr Richard Dennis, admitted nearly all those in existing programmes with private firms, would be better off under the new rules.
It is now incumbent on the Minister, Jamie Hepburn, and the Accountant in Bankruptcy, as a matter of urgency to provide guidance for these firms and to their clients as to how they should transfer their existing cases over so the new fee structure applies, and hopefully that won’t require them to have the case revoked first.
Alan McIntosh, Glasgow G52.
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