Bankruptcy and Diligence (Scotland) Bill: business and regulatory impact assessment

Costs

Option 1

36. There are no immediately foreseeable cost implications of option 1. Notwithstanding, pursuit of option 1 will lead to a failure to realise the benefits of option 2, and there would be a risk of stakeholders feeling that the work they have done to provide recommendations to modernise the current system was being ignored.

Option 2

37. There will be minimal cost to the Scottish Government and organisations with the implementation of option 2 and the introduction of the Bill.

Mental Health Moratorium

38. The enabling powers for a mental health moratorium will have no immediate effect on sectors or groups. Development of future regulations that use these powers will require to be accompanied by a BRIA, and it would be at that point that the effect would be measured and presented.

39. There will be costs incurred by the Scottish Government in the development of a full mental health moratorium process. As the process has not yet been developed these costs cannot be quantified at present. However, estimates detailing parameters of and expected minimum and maximum cost are detailed in the Financial Memorandum.

Minor and technical amendments to bankruptcy legislation

40. These are technical changes to correct errors or address ambiguity in current legislation and will not result in additional costs.

Arrestment or Action of Furthcoming

41. The form the information is to be provided in will be standard and will be prescribed by the Scottish Ministers. While there will be time costs for the arrestee to complete the form, it is envisaged that these will be minimal.

42. It is not known how many bank arrestments are unsuccessful. There were approximately 223,000 non-earnings arrestments executed in the year 2021-22. If 30% of these were unsuccessful this would mean an estimated 66,900 would have been unsuccessful. Assuming 10 minutes to complete the form and staff costs of £15 an hour, this would imply a cost of £167,250 – this is likely to be a significant over-estimate. This cost would be spread across the banks. Sheriff officers have agreed to work with banks to minimise the costs.

Diligence Against Earnings

43. The form that information is to be provided on will be prescribed by the Scottish Ministers. While there will be time costs for the employer to complete the form it is envisaged that these will be minimal.

44. Figures provided by local authorities suggest less than 20% fail. There were approximately 58,000 earnings arrestments executed in the year 2021-22 meaning an estimated 11,000 fail. Assuming again the form requires 10 minutes of staff time at a cost of £15 an hour would suggest a total cost of £27,500. This is likely to be a significant over-estimate. This cost would be spread across all employers.

45. The court may order an employer to pay a financial penalty to a creditor in certain circumstances. A financial penalty will only impact on those employers who, without reasonable excuse, fail to provide the required information. There would be a time and resource cost for a creditor in making an application to the court for such an order where they do not receive the required information. It is not possible to quantify this.

Diligence on the Dependence

46. This will result in additional cost for publishing and distribution which will be incurred by AiB who are already responsible for the costs of printing and distributing the DAIP. These documents cost 18 pence each to print plus delivery to sheriff officers. In the last 5 years there have been approximately 1,800 diligence on the dependence applications. This change would therefore cost an estimated £324.

47. There are no significant cost implications for local authorities for the DAIP. Whilst there may be a small additional cost for the creditor in providing the debtor with a DAIP – and the level of that cost will depend on how that is done – this cost can be added to the debt, and is therefore recoverable from the debtor.

48. There are no significant cost implications for other parties. The DAIP is provided to creditors or their agents by AiB free of charge. Whilst there may be a small additional cost for the creditor in providing the debtor with a DAIP – and the level of that cost will depend on how that is done – this cost can be added to the debt, and is therefore recoverable from the debtor.

Exceptional Attachment

49. This will have no impact on storage costs already incurred as there is no change to the minimum time an item is to be stored before auction.

Money Attachment

50. There are no additional costs to businesses or the Scottish Government.