Official Report 507KB pdf
Common Financial Tool etc (Scotland) Amendment Regulations 2015 [Draft]
Under item 2, we will consider a piece of subordinate legislation. I welcome this morning the Minister for Parliamentary Business, Joe FitzPatrick, who is joined by Graham Fisher, head of branch 1 of the constitutional and civil law division, and Chris Boyland, head of strategic reform, at the Scottish Government.
Minister, do you want to say anything to introduce this instrument?
Thank you, convener. I will try to be brief.
The aim of the regulations is to allow debtors entering into any Scottish statutory debts who wish to retain a contingency allowance—that is 10 per cent of their disposable income subject to a maximum of £20 per month or equivalent—as a buffer against unforeseen expenses. The £20 maximum amount was discussed and agreed by stakeholders and members of our common financial tool working group. The group agreed that this amount struck the best balance between the needs of the debtors and the interests of the creditors.
The need to make this provision now arises because, as you know, the Bankruptcy and Debt Advice (Scotland) Act 2014—which this committee examined in detail—mandates the use of a single common financial tool for all statutory debt solutions in Scotland. The regulations being amended require the tool used to be the common financial statement or CFS, which is available freely under licence from the Money Advice Trust. The CFS is due to be replaced by a new tool—the standard financial statement. It was hoped that this replacement would happen before 1 April and would include a contingency allowance that could simply be built into the new tool but, as things stand, the new standard financial statement will not be introduced on time.
We are making this provision now in order that the debtors can benefit at the same time as other 2014 act changes come into force. The move has been supported by stakeholders, such as Citizens Advice Scotland, which has called it
“A sensible step which will allow those paying off debts to be able to save a small amount of money each month”.
The regulations also take the opportunity to make some minor, technical clarifications and improvements.
I hope that that clarifies the purpose of the regulations. My officials and I would be happy to answer any questions.
Thank you, minister. Do any members wish to ask any questions?
Good morning, minister. We had some contention around whether there should be one tool or two tools, but I accept that we have the common financial tool. In the covering note, it says that, under the CFT regulations, you can add a contingency allowance to the CFT within defined limits. Who will define the limits, and what limits are we talking about?
Chris, do you want to answer that?
The limits are defined in the regulations as the amount that can be retained by way of contingency, which is £20 a month if someone is paying monthly. It works out at a slightly different sum if they are paying weekly, but those are the limits to which you are referring.
Those limits were agreed by partners as striking a balance between the interests of the debtor and the interests of the creditors.
I have just one other question. There have been minor clarifications and corrections in response to the Institute of Chartered Accountants of Scotland. Can you give an indication of how minor they are?
I ask Graham Fisher to respond.
Yes, we can definitely say that these are technical, minor amendments. A lot of them pick up minor typographical points. Part of the process in bringing forward the regulations was to bring them in early so that there was enough time to make any adjustments necessary before 1 April, and that is what we have done. We have also picked up some minor points that the Delegated Powers and Law Reform Committee raised, and we have made all the changes in time for 1 April.
If members have no other questions, we move to the formal debate on the motion. I invite the minister to move the motion.
Motion moved,
That the Economy, Energy and Tourism Committee recommends that the Common Financial Tool etc (Scotland) Amendment Regulations 2015 [draft] be approved.—[Joe FitzPatrick.]
Motion agreed to.
Minister, I thank you and your officials for attending. We will now have a short suspension to allow a changeover of witnesses.
09:52 Meeting suspended.