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Scottish Trust Deed Forum
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Topic starter
21/01/2019 11:22 am
A consultation was launched on 16 January by the Scottish Government (available on the Accountant in Bankruptcy's website) regarding changes they are thinking of introducing to legislation governing Protected Trust Deeds.
It is an attempt to address concerns they have about how some Trust Deed firms are operating in practice. For example, it contains proposals to restrict what outlays a Trustee can claim back from a case over and above their own fee. Also, it is proposed that if a person's debts could be repaid in full within 60 months then a trust deed is inappropriate and would not be eligible for protection.
More controversially, a new voting model for creditors is being put forward. At the moment, if a creditor does not object to Trust Deed proposals then this counts as "deemed consent". However, they are suggesting that they effectively wish to change this by saying that a Trust Deed would only become protected if, FROM THE CREDITORS WHO HAVE VOTED, those who own 75% of the value of the debt have actively accepted the terms of the Trust Deed.
This is designed to give more power to the hand of smaller creditors, such as Credit Unions, who routinely object to Trust Deeds. As matters stand, their votes are usually insufficient to prevent protection from being achieved. However, under the new system their objections could have a lot more weight and a much higher chance of causing a proposed Trust Deed to fail to get protection.
This is because many creditors currently do not bother to respond to Trust Deed proposals, and the principle of "deemed consent" means that this means they have effectively agreed to them. Taking this away could make Trust Deed protection failures much more commonplace.
It isn't yet certain that these changes will happen; nor is it clear when they would become legislation. However, given the potential impact I imagine many people with debt problems may choose to set up a Protected Trust Deed sooner rather than later and avoid the greater uncertainty that this particular change would bring.
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
21/01/2019 3:14 pm
Hi Kevin,
This does sound as though it could restrict access to trust deeds if it came into force.
Thanks for sharing this information. Hopefully the consultation responses will lead to any changes avoiding pitfalls such as this.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
07/05/2019 10:54 am
Wee update regarding these potential changes to Trust Deeds, as I was at a stakeholder meeting hosted by the Accountant in Bankruptcy last week and they shared some preliminary details of the responses received to this consultation, which closed last month.
If I understood correctly, the majority of respondents to the consultation were in favour of the change to the Trust Deed voting procedure outlined above. I don't believe any policy decisions have been made yet, so maybe they will decide not to change it after all, but it does seem that this change is looking more likely now I'm afraid.
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
08/05/2019 10:21 am
Hi Kevin,
I was at the Accountant in Bankruptcy Stakeholder event in Edinburgh yesterday and this was covered on one of the sessions on Trust Deed’s.
The general feeling was that it felt like change for the sake of change in relation to the voting procedure on Trust Deed’s being accepted or not. Like you said the AIB advised that out of their consultation more responses were in favour of the change which surprised me a little.
I think that the current model works fine at the moment and having the possibility of chasing round creditors to have them actively consent to the Trust Deed could be time consuming. In some insolvencies it can be tricky to get a creditor to submit a claim form to pay them money never mind get their consent to a Trust Deed proposal. Even setting up a Debt Arrangement Scheme some creditors are not signed up to the electronic system and still require paperwork to be posted to them.
The AIB are also seeking feedback on more powers for them to prevent a Trust Deed from becoming protected if they do not feel it’s overall in the best interests of the creditors and debtor.
It will be interesting to see how this play’s out. If changes are made we will adjust and adapt to dealing with things but as things stand it could be better to consider dealing with debts now and if a Trust Deed is the option it can be set up.
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