Changes to Protected Trust Deeds (PTDs)

The Protected Trust Deeds (Scotland) Regulations

28 November 2013

Background

• Debt Action Forum (DAF)

• The Protected Trust Deed Working Group (PTDWG)

• Consultation: Protected Trust Deeds – Improving the Process

• Consultation on Bankruptcy Law Reform

Changes to the Regulations

The Protected Trust Deeds (Scotland) Regulations 2013 will introduce a number of key provisions:

• Minimum debt level of £5000.

• Increase of the standard repayment period from 36 to 48 months.

• Acquirenda will vest in the trustee for 4 years.

Changes to the Regulations

• Use of the Money Advice Trust Common Financial Tool to calculate expenditure.

• A formal process for deductions from earnings where contractual obligations are not met.

• A requirement for the trustee to demonstrate that a trust deed is an appropriate solution. If AiB is not satisfied with the case presented, there will be a new power to prevent the granting of ‘protected’ status.

Changes to the Regulations

• Removal of the requirement to advertise the trust deed in the Edinburgh Gazette. The advertisement will appear on the Register of Insolvencies.

• Pre trust deed fees and outlays will be excluded.

Changes to the Regulations

• Trustees will be required to charge a single, fixed, upfront fee augmented by further remuneration based on a percentage of funds ingathered through the administration of the case.

• Fee proposals must be notified to creditors on Form 3 at the outset of the trust deed, including details of how the fixed fee will be taken across the period of the trust deed.

Changes to the Regulations

• Should exceptional circumstances arise that require further expenditure in the case, there will be a process for seeking approval from creditors. Where creditors do not engage, trustees may apply to AiB to decide on whether the increased fee is appropriate.

Changes to the Regulations

• The annual Form 4 will be issued to creditors as well as AiB. Trustees will be required to provide information to creditors if the expected dividend has reduced by 20 per cent or more, provide details of the options available and to make a recommendation on the way forward.

Changes to the Regulations

• No contributions can be paid from a debtor’s social security benefits

• Equity will be frozen in a dwelling-house at the date the trust deed is granted.

• Interim dividends should be paid to creditors, where sufficient funds are available, after 24 months and then 6 monthly thereafter.

Process Modernisation

ASTRA

AiB Supervision of Trust Deeds, Registration & Advertising System

ASTRA is a web-based hub which will support the administration of the PTD process and facilitate the electronic submission of trust deed advertisements and statutory forms.

Process Modernisation

Phase 1

ASTRA will enable users to:

• Complete and electronically submit trust deed advertisements for publication on the Register of Insolvencies – Form 1.

• Complete and electronically submit the protection proposal and supporting documents – Form 3.

Process Modernisation

Phase 2

This phase of the development will:

• Enable users to complete and electronically submit all documents related to the administration of PTDs.

• Introduce the audit and review process.

• Introduce the remaining functionality of the system for Insolvency Practitioners and AiB.

Process Modernisation

Phase 2

• Migrate the existing PTD caseload to the new system.

• Interface with IPs’ third-party systems – discussions are on-going.

This phase should be delivered by 31 March 2014.

Process Modernisation

Phase 3

We hope to extend functionality to allow the system to be used by creditors and their representatives in order that the entire PTD process may be conducted electronically through ASTRA.

PTD Standing Committee

The purpose of the PTD Standing Committee is to:• Provide information and guidance to the AiB

on the administration of PTDs;• Help identify issues or general areas of

concern arising from the administration of PTDs at an early stage; and

• Act as a discussion forum for stakeholders, to ensure that there is an effective conduit for the receipt and dissemination of information concerning PTDs across stakeholder groups and interested parties.

Lisa Ledingham-Park, Trust Deeds Team Leader0300 200 2794, lisa.ledinghampark @aib.gsi.gov.uk

1 Pennyburn Road, Kilwinning, Ayrshire, KA13 6SAT 0300 200 2600 F 0300 200 2601 W www.aib.gov.uk

THANK YOU