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Economy Committee unconvinced by new debt repayment system 29/01/2019 A new system to calculate the financial situation of people in debt or facing bankruptcy should be delayed until significant reservations are addressed, says a Holyrood Committee.

Economy Committee unconvinced by new debt repayment system

A new system to calculate the financial situation of people in debt or facing bankruptcy should be delayed until significant reservations are addressed, according to a Holyrood Committee.

Under the current system, the Common Financial Statement (CFS) helps calculate a payment proposal for those in debt to pay their creditors. The Standard Financial Statement (SFS) was intended to replace the CFS in March 2019, but, following the Economy, Energy and Fair Work Committee’s inquiry into the Common Financial Tool (Scotland) Regulations, the Committee has recommended that a wider review be carried out, and that the proposed system should be deferred by a year, until March 2020.

This is the second time that the Committee has not endorsed the system, which resulted in the Scottish Government withdrawing the regulations in November 2018.

During its inquiry, the Committee heard evidence from financial advisers that under the SFS the ‘trigger figures’, which set the level of repayments to take account of necessary household spending, are less flexible and require more evidence before being approved. This means that those in debt are more likely to struggle with repayments, and it could result in more workload for frontline advisers.

“Following extensive consideration of the regulations, the Committee is unconvinced of the adoption of the Standard Financial Statement. We have significant reservations around the rationale for moving to the SFS and the impact its introduction will have on the living standards of those who are paying back debt,” said the Convener of the Economy, Energy and Fair Work Committee, Gordon Lindhurst. “While a reason for introducing the SFS was for a consistent approach across the UK, the Committee recommends a delay until a more in-depth review by the Scottish Government is carried out.”

More details can be found here.

 

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