The Accountant in Bankruptcy

AiB Stakeholder Events 2012

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Content

1. AiB Mission and Functions

2. Volumes of Activity & Trends

3. Updates

4. Workshop Topics

5. Engaging with AiB

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

1. The Accountant in Bankruptcy (AiB)

Mission:

To ensure access to fair and just processes of debt

relief and debt management for the people of Scotland,

which takes account of the rights and interests of those

involved

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

AiB Functions

Recognising our unique role - we achieve this through the following functions:

• Supporting Ministers to develop & refine policy

• Supervising the insolvency process

• Delivering, with stakeholders, a range of options for individuals seeking debt relief and debt management

• Delivering best value public services

By doing so, we will support the Scottish Government’s purpose – “to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth”

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

2. Trends in Activity

Based on current levels of activity (9 months to end Dec)

• Predicting in 2012/13 cf 2011/12 -16% (decrease) in Bankruptcies -5% (decrease) in PTDsNet 14% decrease in insolvencies+ 46% (increase) in DAS

• Continued reduction in number of creditor petitions between -12% and -18% predicted

• Rise in marketing from debt management companies leading a take-up of targeted debt solutions rather than advice and a holistic approach

• Ministers increasing concerns about:– Debt management firms– Pay day loans– Day/fee rates of IPs not being proportionate to the

circumstances of the case

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Debt Arrangement Scheme (DAS)

Debt Arrangement Scheme Review 2012 Review Period - 1 July 2011 to 30 June 2012. http://www.aib.gov.uk/news/releases/2012/11/debt-arrangement-scheme-review-2012

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Activity Levels

• Number of DAS DPPs increasing

2009/10 - 1,417 2010/11 - 1,910, 2011/12 – 3,319 (73.7% increase)DPPs Approved by Review Period

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2008/09 2009/10 2010/11 2011/12

Review Period (01 July - 30 June)

Nu

mb

er

ap

pro

ve

d

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Activity Levels

DPPs awarded under DAS

0

200

400

600

800

1000

1200

1400

1600

Financial Period

Nu

mb

er

of

DP

Ps

• Within that increase there are quarterly fluctuations

DAS Marketing

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Rate of Uptake

• Per 10,000 working age people

• Significant variation at Local Authority level

• The rate in Inverclyde and West Dumbartonshire is almost 6 times that of the Orkney Islands

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Duration of Plans

• Previously on average DPPs ran for 8 yrs 5mths• The average length of all DPPs since the Scheme started is 7 years 2

months, to the nearest month. • The average length of DPPs approved in this review period is 6 years 8

months Percentage of DPPs by duration

0

10

20

30

40

50

60

70

0 to 5 5 to 10 10 to 15 15 to 20 20-30 30+

Duration (years)

Per

cen

tag

e

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Level of Debt

• Previously on average, debtors owed £24,194• But now the majority of DPPs include debts of less than £25,000• The average debt is now is £18,903 (and median is £12,913)

Percentage of DPPs by debt range

0

10

20

30

40

50

60

70

80

Un

der

£25K

£25K

-£5

0K

£50K

-£7

5K

£75K

-£1

00K

£100

K -

£125

K

£125

K+

Debt Range

Per

cen

tag

e

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Age of Debtor

• The proportion of younger debtors has increased • The average age of a DPP debtor is now 44 years, 11 months

Percentage of all debtors named in a DPP by age at entry

0

5

10

15

20

25

30

35

40

0-19 20-29 30-39 40-49 50-59 60-69 70-79 80+

Age range

Per

cen

tag

e

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Profile of Payments

• The average monthly payment in a DPP is £238 (slight decrease from previous years)

• 36.4%, pay between £101 and £200 per month in their DPP

• 77.4% of debtors make payments of less than £300 per month Percentage of payments by value

0

5

10

15

20

25

30

35

40

0-£1

00

£101

-£20

0

£201

-£30

0

£301

-£40

0

£401

-£50

0

£501

-£60

0

£601

-£70

0

£701

-£80

0

£801

-£90

0

£901

-£10

00

£100

0+

Value

Per

cen

tag

e

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Joint DPPs

• 18% joint DPPs

• 80% Joint applications have debtors with aged 30-59 yrs

• Where as younger applicants tend to be for single DPPsApplication Status

Single, 82.2%

Joint, 17.8%

Percentage of DPPs by age at entry (single/joint)

0

5

10

15

20

25

30

35

40

0-19 20-29 30-39 40-49 50-59 60-69 70-79 80+

Age range

Per

cen

tag

eSingle

Joint

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Average total debt by entry age

• Lower levels of debt for younger participants

Average total debt by age

£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

<25 25-34 35-44 45-54 55-64 65+

Age range

To

tal d

ebt

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Average payments by entry age

• Debtors over the age of 65 paid the highest average monthly payment (£305) towards their DPP.

• This is £58 more than a debtor aged between 45-54 years of age and £178 more than a debtor under the age of 25

Average instalment by age at entry

£0.00

£50.00

£100.00

£150.00

£200.00

£250.00

£300.00

£350.00

<25 25-34 35-44 45-54 55-64 65+

Age range

Inst

alm

ent

amo

un

t

2009/10

2010/11

2011/12

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

DAS – Overall Summary

• DAS is increasingly being used;

– By younger people

– For those with smaller debts

– For those with joint debts (18%) and those with a single debt 3.4%

– As an early intervention – to prevent insolvency

• It is attracting increased interest from other countries

– As an effective debt management option – rather than debt relief

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Insolvencies - Activity Levels

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2006 2007 2008 2009 2010 2011 2012 2013projected

Year ended 31 March

Nu

mb

er

of

Aw

ard

s

Bankruptcies Protected Trust Deeds

LILA Introduced 1 April 2008

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Insolvencies

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500Q

1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2008/09 2009/10 2010/11 2011/12 2012/13

Nu

mb

er

of

Ind

ivid

ua

ls

Sequestrations Protected Trust Deeds

LILA introduced on 1 April 2008

Certificate introduced on 15 November 2010

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Bankruptcy (Sequestration)

• Three routes

– LILA – Low Income Low Asset

– Apparent Insolvency

– Certificate for Sequestration (came into force on 15 November 2010)

• At the end of Q1 this year 2,916 bankruptcy awards had been made using the Certificate for Sequestration

• Of which - trustee breakdown is AiB 39% Private trustee 61%

Debtor Applications Awards Breakdown

1564 54%965

33%

38713%

LILA

Certificate

Apparent Insolvency

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Developing a Vision for the 21st Century

A “Financial Health Service” for debt advice, debt management and debt relief which:

• Ensures access to fair and just processes of debt relief and debt management

• Supports the principle that those debtors who can pay should pay their debts

• Acknowledges the wide range of circumstances and events that contribute towards bankruptcy for individuals and businesses

• Secures the best return for creditors – ensuring that the rights and needs of those in debt are balanced with the needs of creditors and businesses

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Bankruptcy Law Reform Consultation

• Initial Consultation:http://www.scotland.gov.uk/Publications/2012/02/628

– Closed on 18th May 2012– 129 responses including 89 organisations

• Summary of responses publishedhttp://www.aib.gov.uk/news/releases/2012/08/bankruptcy-law-reform-consultation-summary-responses

• Government response published 1 Nov 2012:http://www.aib.gov.uk/news/releases/2012/11/scottish-government’s-response-consultation-bankruptcy-law-reform

• Current work– Ongoing stakeholder discussion & specific engagement

with creditors– Drafting of legislation and Regulations

• Bill introduced to Parliament prior to summer 2013

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

3. AiB Updates

• AiB Senior Management Team

• IIP Gold

• NACAB Adviser

• IAIR

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

AIB Senior Management Team

• The Accountant in Bankruptcy &

• Agency Chief Executive – Rosemary Winter-Scott

• Executive Director Corporate Services &

• Assistant Chief Executive – Charles Keegan

• Executive Director Policy and Compliance & Assistant Chief Executive – Claire Orr

• Executive Director Case Operations &

• Deputy Accountant – John Cook

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

Investors in People Gold

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

CAB adviser located in AiB

Ian Brough

Independent CAB Adviser

Located in AiB, 1 Pennyburn Road, Kilwinning

Contact number: 0300 200 2922

e-mail: ian.brough@nacasadvice.org.uk

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

• Members of the IAIR are:– Government Departments/Ministries – Agencies and Public Authorities

• Which have responsibility in their

country for one or more of:– Insolvency Policy & Legislation – Insolvency Practice & Administration – Insolvency Regulation

• Rosemary Winter-Scott elected Chair of

IAIR 2012-2013• Scotland to host its Annual International

Conference and AGM in Edinburgh

23-26th September 2013

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

“5 Nations”

• Regional group of IAIR:– UK Insolvency Service (England & Wales)– AiB (Scotland)– Northern Ireland– Ireland– Jersey

• Regular meetings to share:– learning from the IAIR conference & any study visits– experiences & development

• Last meeting in Nov 2012 - Scotland

• Irish Bankruptcy Reform• Scottish – DAS, contracting, Bankruptcy Reform Bill

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

5. Workshop Topics

• Bankruptcy Law Reform Bill – what will be

included in the Bill and what are the implications?

• Maximising Efficiency - how can new technology

improve the way we work together?

• Operational Update - your opportunity to learn

about AiB's processes and ask us questions

Stakeholder Events | Rosemary Winter-Scott | Dec 2012

6. Engaging with AiB

Work with us to develop more effective policies for Scotland – A Vision for the service fit for the 21st Century

– Which take account of the rights and interests of all involved

– Importance of ongoing constructive engagement with stakeholders

Participate with us: – Attend the annual Stakeholder events hosted around Scotland

– Call and engage with my staff about any areas of interest

– Invite me/my staff to come out and speak at your events

– Visit our Website – an increasing source of publications & information

– Visit AiB or shadow a member of AiB staff

– Follow us on Twitter @AiB_updates

Rosemary Winter-ScottThe Accountant in Bankruptcy & Agency Chief ExecutiveT: 0300 200 2901 E: ce@aib.gsi.gov.uk