Bankruptcy law reform common financial tool
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Bankruptcy Law Reform: Common Financial Tool. Claire Orr. Common Financial Tool. Bankruptcy Law Reform consultation proposed a single financial tool to ensure consistency in assessment of debtors’ income and expenditure.

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Bankruptcy Law Reform: Common Financial Tool

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Bankruptcy law reform common financial tool

Bankruptcy Law Reform: Common Financial Tool

Claire Orr


Common financial tool

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.


Common financial tool regulations

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.


Next steps

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.


Bankruptcy law reform common financial tool

Claire Orr, Executive Director Policy & Compliance

THANK YOU

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