By Alan McIntosh

THE English Law Commission in 2016, writing about a type of English debt security known as Bills of Sale, said they were primarily used by logbook loan firms and mainly used by people who had difficulty accessing forms of credit.

Bills of Sale allow lenders to secure their debts over the property of individuals, so if they can’t pay, the creditors can seize the property and publicly auction it, as was frequently shown in the programme, Can't Pay? We'll Take it Away!, that featured English bailiffs.

Historically, this practice has not been possible in Scotland for loans, unless a lender used an area of law known as Diligence, which concerns legal debt recovery. However, in 2002, the Scottish Parliament created an extensive list of property that it said couldn’t be attached and sold. This included items like settees and cars valued up to £3,000, where it could be shown there was a reasonable requirement for the vehicle.

However, a new law now being proposed by the Scottish Government called the Moveable Transactions (Scotland) Bill threatens to change this, and will allow a Scottish version of Bills of Sales to be used over any personal item with a value of more than £1,000, that could include settees and cars.

Statutory Pledges, as they are currently called (although they propose giving them a “snappier” name like “New Moveable Securities”), are likely to lead to a rise in sub-prime lending in Scotland, with some lenders charging up to 400% in interest. They are also likely to see fewer lenders using agreements like hire purchase and conditional sale, which although they still allow goods to be repossessed, contain additional protections for consumers. So, for example, if you are experiencing financial difficulties with a loan secured by the security, you won’t be able to return the item and restrict your liability to only half the amount owed under the agreement (instead you will be liable for the full amount). The Scottish Law Commission, which drafted the new laws, acknowledges this in its discussion paper, when it said “…and it may be that the automobile finance sector might find the moveable security to be preferable to hire purchase”. The only reason this would be the case is if the new laws will contain fewer protections for consumers.

Why the Scottish Government has chosen now, in the middle of a cost-of-living crisis, when people are under increasing pressure to borrow for essentials, to tilt the scales in favour of sub-prime lenders is unfathomable. It even rejected suggestions, raised by the Law Society of Scotland, that the 2002 rules should be applied to the new laws, so no item currently protected from diligence could be used as a debt security by lenders.

If this law is passed, not only will it see more cars being repossessed by Sheriff Officers (Scotland’s Bailiffs), but borrowers will face the double whammy of losing possession of their property and being left with more debt.

Alan McIntosh is the Managing Director of Advice Talks Ltd, which operates the website