1. Bankruptcy Law Reform: Common Financial Tool Claire Orr

2. Common Financial Tool Bankruptcy Law Reform consultation proposed a single financial tool to ensure consistency in assessment of debtors’ income and expenditure. Common Financial Tool Working Group (CFTWG) was set up to consider existing tools or Scottish-specific. CFTWG supported recommendation for CFS to become the single tool in Scotland. The Bankruptcy and Debt Advice (Scotland) Act 2014 gives Scottish Ministers power to specify a common financial tool. CFT regulations provide the detail of the tool and how it will operate i.e. CFS.

3. Common Financial Tool regulations All money advisers will be required to use the CFT with clients to assess surplus income prior to entry into a statutory debt solution. Money advisers must verify income and expenditure and confirm debts. Debtor’s contribution will be the surplus income identified using the CFT. No contribution will be taken in bankruptcy or PTDs where the debtor’s sole income is derived from welfare benefits. The CFT must be used to re-assess surplus income where debtor is seeking variation or payment break. AiB will undertake a programme of random annual audits to monitor the use of CFT.

4. Next steps Scottish Common Financial Tool Working Group met to discuss draft regulations and guidance in July 2014. Future SCFTWG meetings will take place during rest of year to develop scenarios and CFT guidance. Common Financial Tool Regulations have been introduced to Scottish Parliament and will commence 1 April 2015. AiB representation on CFS Client Support Steering Group (CSSG). Monitor progress on UK discussions on single income and expenditure statement (based on CFS format, principles and trigger figures). The new ‘CFS-Plus’ will improve the CFS including revising categories and allowing for savings provision.

5. Claire Orr, Executive Director Policy & Compliance 1 PENNYBURN ROAD, KILWINNING, AYRSHIRE, KA13 6SA T 0300 200 2600 F 0300 200 2601 W WWW.AIB.GOV.UK THANK YOU