Chamber and committees

There are requirements for that in the strategy, but there are important flexibilities, too.

I will provide the detail behind that.

There is a good level of engagement between procurement officials in Scotland and those in the other nations of the UK. We have seen recent reform of procurement legislation, both by the UK Government on behalf of England and in reserved bodies, and also in Wales.

Of course, beyond that engagement, we are looking on with interest at what is happening, and, in many respects, we are seeing other parts of the UK seeking to catch up with where we are in Scotland. As we touched on earlier, we are very much ahead of the curve, because of what we achieved in 2014. Different provisions have come in via UK legislation, and we will, of course, want to monitor that very carefully. We are always keen to understand different approaches and any learning that we can take from them.

Broadly, what we have in Scotland—and what has been reflected in the evidence that the committee has taken—is a strong piece of legislation that supports regulations, buttressed by the comprehensive suite of guidance and support that we have touched on.

The Scottish Government thanks Murdo Fraser for his proposed amendments 4, 5 and 6, which I will address shortly. First, I will talk to my amendments 13 and 14. The purpose of the amendments is to enable a creditor or an officer of court to serve an arrestment schedule, earnings arrestment schedule or current maintenance arrestment schedule electronically, where the arrestee or employer has expressed to the creditor or the officer of court that they are willing to receive documents in that way. That new option in serving an arrestment is in addition to existing methods of service by personal delivery and by post.

It has been brought to my attention by Alan McIntosh—whom I know the committee has had some engagement with—that amendment 14, as currently drafted, might have some potential unintended consequences by encouraging personal service, which was not the policy intention. I thank Mr McIntosh for that observation. I intend to remedy the issue at stage 3, to reflect the policy intention of providing an additional method of service by electronic means.

Electronic forms of communication are part of a modern society and it seems reasonable to extend that to the service of arrestment and earnings arrestment schedules. Arrestment schedules are predominantly served on banks, with creditors seeking to recover debt from a person’s bank account. It is hoped that introducing the amendment will help to simplify the process for banks where they choose to receive the schedules electronically. There is no change to how a debtor is notified about an arrestment.

Earnings arrestment and current maintenance arrestments are used by creditors to recover a debt through a person’s earnings. The person’s employer is notified of the arrestment through an arrestment schedule, which is currently either hand-delivered to the employer or sent by post. Sheriff officers have reported that it is becoming increasingly difficult to serve an arrestment schedule personally because of the hybrid working models that have resulted in offices being staffed less frequently, which provides fewer opportunities for a sheriff officer to serve the relevant documents.

Introducing the ability to serve those documents electronically will provide an alternative method of service, which I understand that employers have indicated to sheriff officers they would welcome. Most employers use technology, and receiving an arrestment electronically will make that simpler for many employers.

Amendment 14 will also introduce a technical amendment to section 70(5) of the Debtors (Scotland) Act 1987 to ensure that an earnings arrestment schedule or current maintenance arrestment schedule can be competently served on an employer on a Sunday or public holiday if service is by post or electronic transmission.

Amendments 4, 5 and 6 would remove the requirement for the arrestee—often a bank—or the employer to notify the creditor in all instances when no property has attached or an earnings arrestment has been unsuccessful and replace it with a requirement to notify the creditor only where the creditor specifically requests confirmation. The amendments would also remove the requirement for the notification to be sent within a defined period of the arrestment schedule being sent, and replace it with a requirement to notify

“as soon as reasonably practicable”

following receipt of a request from a creditor. I caution against agreeing to amendments 4, 5 and 6, as they have the potential to delay creditors in receiving important information, which would not be the case under the current drafting of sections 6 and 7 of the bill.

The bill, as introduced, will strengthen the effect of section 70A of the 1987 act. That will be achieved by requiring the employer to notify the creditor, when an earnings arrestment has been unsuccessful, within 21 days of the arrestment schedule being served. It will also strengthen the effect of section 73G of the 1987 act, by requiring the arrestee to notify the creditor as to why no property has attached within three weeks of the arrestment being executed.

In both circumstances, under the bill as introduced, the employer or arrestee would be required to respond only once. We would anticipate that they would do that at the time when they are actioning the arrestment and learn that it is unsuccessful. For a creditor, learning that an arrestment has been unsuccessful is invaluable in helping them to determine what their next steps should be.

The member’s proposed amendments 4, 5 and 6 would also remove the defined deadlines that have been set for the arrestee to confirm to the creditor why nothing has attached and for the employer to notify the creditor of an unsuccessful earnings arrestment. That would leave the period of response open to interpretation by different arrestees and employers, to the detriment of the creditor.

Government bodies such as HM Revenue and Customs and councils, which use summary warrant procedure, would be prevented from requesting information under proposed amendment 4. I would caution against that as, without access to information, some actions that could be stopped may continue when that is not in the interests of any party.

The Scottish Government wants to have diligence procedures that are fair to all parties involved. The effect of the current wording at sections 6(2) and 7(2) of the bill will ensure that creditors are provided with the information that they require within a defined time frame. That will enable them to decide whether further action is necessary and remove the need for speculative repeat service of arrestments on third parties.

The Accountant in Bankruptcy will continue to liaise with banks, employers and sheriff officers in order to minimise the burden on the arrestee and employers, while balancing the information requirements for the creditors.

For those reasons, the Government does not support amendments 4, 5 and 6, and I ask Murdo Fraser not to move them.

I move amendment 13.

Yes, but I would add, with regard to how the Accountant in Bankruptcy operates, with its statutory responsibilities, that there is a continual process of review, given how the landscape can evolve. When a new measure such as a mental health moratorium is introduced, careful monitoring would of course be part of that, so that would be happening anyway, as routine business.

This point could inform conversations ahead of stage 3, if members are agreeable, on what enhanced parliamentary scrutiny would look like. I would be happy to consider proposals for a requirement to review within a defined period, if there is a desire for that. In making commitments to review legislation, there is always a need to ensure that we do not commit ourselves to review prematurely, which would just be an exercise in conforming to statute but without adding real value. I recognise, however, that there might be a desire for that to take place within what would be regarded as a reasonable timescale. I do not think that it is strictly necessary, but, if there was an appetite from the Parliament, reassurance should be provided, specifically on the regulations and formalising the approach.

I will close on this key point. I ask members not to press or move their amendments in this group but to work with me ahead of stage 3 to identify a suitable process of parliamentary oversight of and engagement on regulations, so that we can retain the flexibility that regulations provide while ensuring that the Parliament has the opportunity to engage.

For clarification, the pilot project that I referred to will conclude at the end of this month, so we hope to provide information on it quite shortly.

I thank Daniel Johnson for using his amendments to highlight the important role that the debt advice and information package plays for people who are experiencing debt issues, and I welcome his desire—which, I am sure, we all share—to make improvements to the current processes.

However, I have some concerns about the approach that is taken in amendments 24, 27 and 28. One of those concerns is about ensuring that the information that would be provided during the discussions that were held by creditors would be of a high standard. The Bankruptcy and Debt Advice (Scotland) Act 2014 introduced a requirement for anyone who was considering statutory debt solutions to have received advice from a qualified adviser. The Government wanted to ensure that the advice was accurate and consistent, and that each individual circumstance could be considered. I want us to ensure that that is the case for anyone who is given advice about debts in this context. We need to maintain those high standards.

I also have concerns about a creditor’s ability to hold a discussion on the content of a debt advice and information package. If the creditor was simply to read from the package, I am not sure what value that would add. Some creditors might decide to train their staff to hold such discussions, but we would need to be sure that the content of those discussions was accurate and of a high standard.

That would come at a cost. It is likely that other creditors, especially smaller creditors, would pass on the discussion to an alternative contact, perhaps from the debt advice sector, and we would need to be clear that the debt advice sector could handle an increase in demand. We have heard that it is already under pressure, and I caution against adding more pressure to it at this time. Using an alternative contact might also result in delaying the creditor’s pursuit of the debt while they wait for the discussion to take place.

When we talk about creditors, particularly where diligence is concerned—we have touched on this already this morning—we tend to think about local authorities, which is only to be expected, as they are the biggest users of diligence. However, it is worth bearing in mind that anyone who is trying to recover a debt can use diligence, provided that they follow the correct process. That includes the local plumber or joiner, credit unions and someone who lent a family member money. If we are to introduce new requirements, we need to think about how the process involves all creditors, not just local authorities.

Amendment 30 would require a review of the impact of a debt advice and information package in providing support to individuals experiencing debt recovery action. I am happy to look at alternative ways to encourage people to get the help that they need and to advise on where to find that help, as well as to explain the consequences of doing nothing about the debt. Through amendment 30, the member has highlighted some ways in which we can do that—for example, through online videos and instant messaging—and I very much welcome those suggestions.

I would be happy to conduct further discussions with the member to further understand his concerns and to ensure that they are included in the review of the document. In looking at alternative ways to encourage people to get the help that they need, I am happy to consider the proposals that the member has suggested. However, I remain to be convinced that, at this stage, there is a need to legislate for the review to take place. Earlier, I touched on the way in which the AIB operates, whereby there is an on-going process of review and learning engagement, but I would be happy to discuss that in more detail with the member. I therefore ask the member not to move amendment 30.

Given the concerns that I have outlined, and given that we are already in the process of reviewing the debt advice and information package, I ask the member not to press amendment 24 or to move his other amendments in the group.

The Scottish Government wants to ensure that the current Scottish statutory debt solutions remain fit for purpose and continue to be updated to reflect a modern society. All three amendments have come from recommendations that were made in the committee’s stage 1 report.

Amendment 7 comes from the recommendation to consider the Law Society of Scotland’s suggestion in relation to the payment of interest where sequestration is recalled. That suggestion is that, within the first six months of a sequestration, recall may be awarded on the basis of full repayment of the debts without interest being charged. However, where debts are repaid more than six months after the sequestration begins, interest would have to be paid in order for a petition or application for recall to be successful.

The Scottish Government believes that it is important and beneficial for a debtor to be able to follow a recall process that enables them to extract themselves from an insolvency process timeously where they need not have been made bankrupt and are able to settle their debts in full.

It is also right that creditors should have their debts settled as quickly as possible. Where there is an undue delay in the settlement of those debts, they should be entitled to be compensated with the payment of interest. It is accordingly important, as in bankruptcy generally, to seek to strike a balance between the rights and interests of debtors and those of creditors. I believe that payment of interest on creditors’ debts where those are paid more than six months after the award of sequestration, where recall is being sought, strikes that fair balance and brings clarity to an area of the law where I know there has been some doubt up to this point.

Amendment 8, which again comes from a committee recommendation, will provide sheriff officers with more time to cite the individual to appear at a hearing in a sequestration case. That is achieved by removing the upper limit on the window for citation, which is currently 14 days before the hearing date set by the court.

Amendment 1 would also provide sheriff officers with more time to cite the individual. However, that would be achieved by increasing the upper limit to 21 days instead of removing it completely. Amendment 8 removes the upper limit completely, which will make it competent for sheriff officers to serve the warrant citing the individual on any day from the date the sheriff grants the warrant up to six days before the hearing date. Amendment 8 will therefore provide greater scope for sheriff officers to competently cite the individual by giving them as much time as possible to serve the warrant on individuals, especially in more rural areas or where the individual works away from home frequently and multiple visits from sheriff officers are required to ensure that the warrant is personally served on the individual.

The change that is introduced by amendment 8 will have no adverse effect on debtors, as it will mean in effect that an individual in problem debt could have more notice before having to appear in court than is currently allowed, giving them more time to get appropriate advice.

Although I support the principle of amendment 1, it allows for only a limited extension of the time in which a petition can be served on an individual. As stated previously, amendment 8 will extend that further and be more beneficial to all parties involved, including debtors.

Having engaged with the Society of Messengers-at-Arms and Sheriff Officers, which originally raised the issue with the committee, we have concluded that the upper limit on the window for citation should be removed rather than extended. The Government’s amendment will allow a petition to be served from the date the sheriff grants a warrant to cite up to six days before the hearing. Therefore, I ask the committee to support amendments 7 and 8 and I invite Mr Fraser not to move amendment 1.

I move amendment 7.

I have no further comments, convener.

Amendment 7 agreed to.

Section 3, as amended, agreed to.

After section 3

Amendment 1 not moved.

Amendment 8 moved—[Tom Arthur]—and agreed to.

Sections 4 and 5 agreed to.

After section 5

The committee will be relieved to hear that I will speak only very briefly to amendment 11. This is a technical fix to correct an anomaly that has arisen as a result of various changes to bankruptcy legislation since 2007. Commissioners can have an important role in supervising the actions of trustees, but it is the Accountant in Bankruptcy’s responsibility to supervise both trustees and commissioners. It is therefore inappropriate to have commissioners in a case where the Accountant in Bankruptcy is the trustee.

Cases with commissioners are fairly unusual, so the anomaly, which since 2007 has allowed commissioners to be in office even when the Accountant in Bankruptcy is the trustee, has not caused any major difficulties in practice. However, it is clear that the current situation is not what was intended in policy terms. Amendment 11 is intended to return the position to what it was prior to 2007, which was that no commissioners may be elected when the Accountant in Bankruptcy is the trustee in sequestration and, in a situation where a commissioner already holds office, that commissioner would cease to hold office if the Accountant in Bankruptcy then becomes the trustee.

I move amendment 11.

Amendment 11 agreed to.