The Accountant in Bankruptcy Stakeholder Events 2011

Rosemary Winter-Scott | The AiB | Nov 2011 Content 1.AiB mission and functions 2.Updates on our areas of responsibility –Debt policy –Diligence –Debt arrangement scheme –Protected trust deeds –Bankruptcy 3.Future vision for the service and AiB 4.Workshop Topics 5.How can you engage with us

Rosemary Winter-Scott | The AiB | Nov Who? Not the Allied Irish Bank! AiB not AIB

Rosemary Winter-Scott | The AiB | Nov 2011 The Accountant in Bankruptcy (AiB) Mission: To ensure access to fair and just processes of debt relief and debt management for the people of Scotland, which takes account of the rights and interests of those involved

Rosemary Winter-Scott | The AiB | Nov AiB Functions Recognising our unique role - we achieve this through the following functions: Supporting Ministers to develop & refine policy Supervising the insolvency process Delivering, with stakeholders, a range of options for individuals seeking debt relief and debt management Delivering best value public services By doing so, we will support the Scottish Government’s purpose – “to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth”

Rosemary Winter-Scott | The AiB | Nov Debt Policy What it is: Recent transfer of responsibility from Social Inclusion Directorate Advice and training (MATRICS) provided to customers and money advisers from: –Money Advice Scotland (MAS) –Citizens Advice Scotland (CAS/CAB) Liaison with UK Government on: –National Debt Line –Money Advice Service What is the AiB’s role: Developing and refining policy N.B. AiB can not itself provide advice to its customers Funding assistance

Rosemary Winter-Scott | The AiB | Nov Diligence What is happening: Looking at the case for combining multiple debts into one charge for payment and one execution of diligence Reviewing and validating diligence statistics with a view to future publication Reviewing the available diligence measures Further evidence collection on the treatment of the home in diligence/ land attachment

Rosemary Winter-Scott | The AiB | Nov Debt Arrangement Scheme (DAS)

Rosemary Winter-Scott | The AiB | Nov DAS What has changed New scheme launched 1 st July 2011 Money Advice gateway widened AiB as DAS Administrator took over ongoing administration of DPPs from free sector money advisers Private sector included New central IT system (DASH) to improve transparency Joint DPP for couples DPPs for single debt Change to payment distribution process Recovers costs to public purse

Rosemary Winter-Scott | The AiB | Nov 2011 DAS - Some Facts… Number of DAS DPP increasing 2009/10 - 1, /11 - 1,910 (34.8% increase) 2011/12 – predicting 3,000 (300 applications in Aug) Currently 78 approved public and 14 private money adviser organisations in Scotland On average, debtors owe £24,194 The average monthly payment in a DPP is £249 33% of payments fall within £101 and £200 per month On average DPPs run for 101 months (8 yrs 5 mths) Average age of a DPP debtor is 45 yrs, 7 mths End Sept’ applications this year to-date (856 since new regulations on 1 st July 2011) 130 joint DPPs 32 for a single debt

Rosemary Winter-Scott | The AiB | Nov DAS - Statistics

Rosemary Winter-Scott | The AiB | Nov Protected Trust Deeds - Some Facts… 2010/11 number of PTDs registered 7,980 compared to 2009/10 – 9,180 (13% decrease) 36% of PTDs concluded in 2010/11 failed to pay a dividend Average dividend in PTDs concluded in 2010/11was 16.2p compared to 15.7p in 2009/10 & 17.6p in 2008/09 For cases concluded in 2010/11 48% of funds ingathered went to pay creditors 5% of cases PTDS protected in 2009/10 increased costs by more than 25% after the first year In nearly 6% of PTDs protected in 2009/10 dividend projections reduced to zero after the first year. Consignations – 80% of £21m at AiB is from PTDs

Rosemary Winter-Scott | The AiB | Nov PTD - Consultation Consultation launched on 17 October 2011 Consultation closes on 31 January 2012 Seeks to strike the best balance for both debtors and creditors Based on the PTDWG recommendations AiB PTD Guidance Seeking to simplify the process and ensure better understanding by debtors, creditors and other stakeholders Considers both legislative and non-legislative measures

Rosemary Winter-Scott | The AiB | Nov Bankruptcy Bankruptcy legislation Consolidation Bill - Reviews: –Financial assessment tools used throughout the insolvency sector –Part 2 of HODP Act - Including monitoring uptake of the new Certificate for Sequestration Longer term policy considerations - A more radical review of policy options based on: –Developing the principle that those debtors who can pay should pay their debts, –Securing the best return for creditors –Recognising the specific circumstances and needs of sole traders/partnerships

Rosemary Winter-Scott | The AiB | Nov 2011 Activity Levels

Rosemary Winter-Scott | The AiB | Nov 2011 Statistics - Insolvencies

Rosemary Winter-Scott | The AiB | Nov 2011 Certificate for Sequestration Came into force on 15 November 2010 At the end of Q2 this year 4807 bankruptcy awards were made through debtor applications Certificate trustee breakdown is AiB 37% Private trustee 63%

Rosemary Winter-Scott | The AiB | Nov 2011 AiB Achievements 2010/2011 Built on stakeholder relationships, stakeholder communications and stakeholder forum - DISSF Changed the make up of our Board – making us more accountable and transparent and added Policy & Cases Committee Placed increased emphasis on moving towards full cost recovery Formalised a qualifications strategy for AiB staff which includes insolvency (CPPI) Developed our IT/Web based services - web-portal for new providers and DASH (for DAS)

Rosemary Winter-Scott | The AiB | Nov 2011 Financial Position Reduced, year-on-year, the cost of bankruptcy to the public purse –from £7.1m in 2006/07 to £5.5m in 2008/09 (= 20% of the costs in 1993). –to £3.68m in 2009/10 and £2.2m in 2010/11 –SR2010 – 40.4% SR2011 – further 37.5% reduction in allocated funding to AiB

Rosemary Winter-Scott | The AiB | Nov Moving Forward – The Current Situation Majority Government 5 year term of office/proving ground Reframed debate on nationalism –Scotland Bill and beyond –Reserved/devolved functions A broad and ambitious agenda for Reform –Pace of change is high –Increased pressure from the spending review –Need to drive greater efficiency Need to define a new level of Ambition –If we don’t do it now we never will –Focus on outcomes and improvements to the whole system

Rosemary Winter-Scott | The AiB | Nov 2011 The Development of Bankruptcy The essentials of the modern system of Bankruptcy emerged with the Bankruptcy Act in 1814 Photography – had yet to be developed Bankruptcy (Scotland) Act 1839 Anaesthetic had still not yet been developed Bankruptcy Act 1856 and Joseph Lister had not yet begun to use antiseptic in surgery

Rosemary Winter-Scott | The AiB | Nov 2011 The Development of Bankruptcy Bankruptcy (Scotland) Act 1913 Insulin had not yet been isolated & Clarence Birdseye had yet to invent frozen food Bankruptcy (Scotland) Act 1985 Facsimile (fax) machine had yet to be invented & mobile phones had only just appeared Bankruptcy (Scotland) Act 1993 but the Digital camera had yet to be invented

Rosemary Winter-Scott | The AiB | Nov 2011 What is our world like now? Consumer debt Debt management firms Business closuresRecession threats New forms of communication & advertisement Credit cards

Rosemary Winter-Scott | The AiB | Nov 2011 Developing a Vision for the 21 st Century A service for debt advice, debt management and debt relief which will: Ensure access to fair and just processes of debt relief and debt management Support the principle that those debtors who can pay should pay their debts Whilst acknowledging the wide range of circumstances and events that contribute towards bankruptcy for individuals and businesses Secure the best return for creditors – ensuring that the rights and needs of those in debt are balanced with the needs of creditors and businesses

Rosemary Winter-Scott | The AiB | Nov 2011 A “Financial Health Service” “The purpose of bankruptcy law, properly used rather than abused, is to serve as a financial hospital for people sick with debt” William W. M McBryde Page 9 – second edition quoting a classic American text

Rosemary Winter-Scott | The AiB | Nov 2011 A “Financial Health Service” Providing rehabilitation/repatriation of individuals and organisations in relation to their financial pressures The development and delivery of a range of products including for personal and sole traders/partnerships which recognise differences in terms of the level and cause of debt Different routes/products for individuals – which place different expectations on debtors and which encourages them to make appropriate contributions Debtors provided with appropriate advice and aware of the range of options An education role – seeking to impact on the culture and behaviours of individuals and prevent repeated financial issues

Rosemary Winter-Scott | The AiB | Nov 2011 A “Financial Health Service” continued A focus on individual responsibilities - with a greater emphasis on: –debtors through an agreement/contract between debtors and the deliverers –creditors in terms of responsible lending, active engagement and more differentiation of individuals credit rating –Insolvency Practitioners in terms of seeking to help stamp out bad practice from debt management companies –AiB to effectively regulate the service and ensure fair and effective delivery A research function - to better understand the triggers of debt, bankruptcy and insolvency and where preventative spend could have the greatest impact

Rosemary Winter-Scott | The AiB | Nov 2011 AiB as the ‘Hub’ AiB Strategic Overview Centre of expertise and knowledge Facilitator Independent and honest broker Gatekeeper Efficient Educator Selective deliverer Research function Regulator (of regulators in an independent Scotland) Collaboration & consultation - with stakeholders Information Provider

Rosemary Winter-Scott | The AiB | Nov 2011 Achieving the Vision Ministers (Mr Ewing and Mr Swinney): are supportive of the vision and recognise that the interventions will be significant They have: asked us to enhance the proposition based on stakeholder & staff engagement offered to look for a legislative slot to implement changes and consolidate This means: Policy options need to be refined and a consultation paper drafted by December 2011 Public consultation February - April 2012

Rosemary Winter-Scott | The AiB | Nov Workshop Topics PTD – AiB Trust Deed Guidance & Consultation – an opportunity to discuss the consultation and to understand the rationale behind it Certificate for Sequestration – this new route to bankruptcy has been available for nearly a year, what are the lessons learned? Debtor Responsibilities – an open debate on achieving a balance between debtor rights and responsibilities Developing AiB Services for the Digital Age – an opportunity to explore how we can improve our services and develop how we engage effectively with our stakeholders by using electronic/online technology

Rosemary Winter-Scott | The AiB | Nov How can you engage with us? Recognise the ambition of this government –And remember the impact of devolution in Scotland Work with us to develop more effective policies for Scotland –Which take account of the rights and interests of all involved –But which recognise the real opportunity to do something different –We welcome early and constructive engagement with stakeholders Participate with us: –Attend the annual Stakeholder events hosted around Scotland –Call and engage with my staff about any areas of interest –Invite me/my staff to come out and speak at your events –Visit our Website – an increasing source of publications & information –Visit AiB or shadow a member of AiB staff –Follow us on

Rosemary Winter-Scott The Accountant in Bankruptcy & Agency Chief Executive T: E: