Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024: equality impact assessment

Background

4. In 2019 Scottish Ministers committed to undertake a wide-ranging policy review of Scotland's statutory debt solutions, specifically moratorium protection, bankruptcy, PTDs and the Debt Arrangement Scheme, with the aim of further enhancing and improving the system.

5. Additionally, the then Economy, Energy and Fair Work Committee, conducted a short, focused inquiry into PTDs in early 2020 and their report of recommendations was published in May 2020.

6. During Stage 2 of the wider review of Scotland's statutory debt solutions a stakeholder working group considered the recommendations made by the Economy, Energy and Fair Work Committee while considering options on how to improve the current PTD process. From these discussions the group produced a list of recommendations and presented these to Scottish Ministers.

7. These Regulations bring forward the areas requiring secondary legislation for PTDs from recommendations made in Stage 2 of the review of Scotland's statutory debt solutions on how the PTD process could be improved. Other areas which require primary legislation are being taken forward in the Bankruptcy and Diligence (Scotland) Bill, which was introduced to Parliament in April 2023. The remaining areas being taken forward are through a mix of operational guidance and separate secondary legislation.

8. In brief, the provisions included in the Regulations amend the Bankruptcy (Scotland) Act 2016 to:

• make the terms contained in a voluntary protocol a statutory requirement, more specifically:
  • where a dividend is payable it will be paid to creditors at month 12 and quarterly thereafter
  • a trustee has to seek the agreement of Accountant in Bankruptcy (AiB) when refusing to discharge a debtor from a PTD
• allow for the removal of protected status of a PTD where there has been an error made in the process of the trust deed gaining protected status
• remove any time limitations for a trustee refusing to apply for a debtor's discharge
• allow the early discharge of the debtor where extenuating circumstances affecting the debtor means that the debtor is no longer able to meet their obligations under the PTD, that there is no reasonable prospect of the debtor being able to begin meeting their obligations again and that the trustee considers that the debtor should be discharged early
• allow AiB to act as trustee of last resort where a trustee can no longer act in that capacity and a replacement trustee cannot be found
• increase the supervision fee of a trustee under a PTD
• place beyond doubt that an individual or entity applying for the protection of a trust deed will have to have been habitually resident in Scotland or established a place of business in the year prior to the granting of the trust deed – alternatively a body or entity applying will have to be constituted or formed under Scots law and carried out business within Scotland.