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Notes for Guidance - Common Financial Tool

Notes for Guidance explaining the information and evidence requirements to support debt solution applications

5. Expenditure

5.1 Expenditure categories set out within the CFT are as follows:

  • essential expenditure
  • phone costs
  • travel costs
  • housekeeping
  • other expenses

5.2 There are 'trigger figures' for each area of expenditure with the exception of Essential Expenditure. An independent third-party conducts the calculations to determine the trigger figures, using research from the Government’s Living Costs and Food Survey. This survey is based on a random sample of lower-income UK households produced by the Office for National Statistics. AiB has no involvement in the calculation process, which has been applied consistently since adoption of the CFS as Scotland’s statutory Common Financial Tool.

5.3 They assist money advisers/trustees to determine whether the amounts included in the financial assessment are acceptable or whether they should be subject to further investigation or the provision of additional evidence of expenditure.

5.4 Money Advisers and trustees should always investigate if a debtor’s declared expenditure could be considered too high, or too low.

5.5 Trigger figures take account of household composition and include allowances for dependents and other adults in the home. Expenditure levels that fall within the trigger figures would not normally require further explanation in submitting proposals to creditors.

5.6 The trigger figures are calculated using research from the UK Government’s Living Costs and Food Survey (previously known as the Family Expenditure Survey). These figures are updated annually, and each organisation should ensure the appropriate allowances are applied.

5.7 The trigger figures are derived from the Office for National Statistics Living Costs and Food Survey (LCF). The LCF collects information on spending patterns and the cost of living that reflect household budgets. Respondents to the LCF are split into five income quintiles. The trigger figures are based on spending levels observed within households in the lowest income quintile.

5.8 It is important that the CFT trigger figures do not form the starting point for any assessment of expenditure. The CFT assessment should include details of the debtor’s actual circumstances.

5.9 Only when the full expenditure has been established and relevant evidence, or explanation, obtained where appropriate, should the debtor’s financial circumstances be compared to the corresponding trigger figures.

5.10 Regulation 15(3) of the Bankruptcy (Scotland) Regulations 2016 and Regulation 3(3) of the CFT Regulations, include provision for AiB, the trustee or trustee acting under a protected trust deed, to allow expenditure which is in excess of the trigger figures.

5.11 However, in these circumstances, an explanation of why this expenditure is required must be provided along with suitable evidence to support the allowance made. Consideration will be given to whether this allowance is reasonable in the circumstances given.

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