Committee calls on the Government to assess the impact of bankruptcy reforms

03.12.2013

Legislation that significantly reforms bankruptcy and debt advice has been supported by the Economy, Energy and Tourism Committee.

Legislation that significantly reforms bankruptcy and debt advice has been supported by the Economy, Energy and Tourism Committee.

The Committee supports the mandatory provision of money advice and financial education proposed in the Bankruptcy and Debt Advice (Scotland) Bill. However in its stage one report, the Committee is calling on the Scottish Government to clarify the impact of this provision on the workload of the ‘free money advice sector’ and the cost of delivering.

It is also calling on the Scottish Government to enter into negotiations with the UK Government and the financial/credit industry to gauge whether to increase the levy paid by the industry to the debt/money advice agency to meet any increased costs of providing advice and education.

The Committee also welcomes the consideration by the Scottish Government on the issue of the retention of bank accounts by undischarged bankrupts and whether the Bill can be amended to make it easier for such people to hold a bank account.

Convener of the Committee, Murdo Fraser MSP said:

“This legislation represents a significant step forward in helping those in severe financial difficultly and who enter the bankruptcy process.  Importantly, it can prevent people getting into debt in the first place through financial education. However, in this context of public sector austerity, we need to be clear about how much this will cost and who will pick up the tab.

“In the run up to this festive period, this is a stark reminder that there needs to be high quality financial education in place to make sure that more people don’t fall into the vicious circle of debt”.   

The Committee’s report includes a number of recommendations on the use of a common financial tool, the minimal assets process and the transfer of functions from sheriff courts to the office of the Accountant in Bankruptcy.

Background

The Committee’s stage one report will be debated by the full Parliament. The Parliament will then vote on whether to agree to the general principles of the Bill.

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