Stage Three Review – Final Report

We are delighted to deliver our final report on the future of statutory debt solutions and the personal insolvency regime in Scotland. It has been a privilege to work on a topic so close to our hearts, in a sector filled with such talented and passionate people.

Many people impacted by problem debt shared their experiences with us and not only have their insights informed and improved our work, they have provided a critical reminder of the importance of regime effectiveness and practitioner expertise.

Our review has identified excellent work taking place across the country, and we have been pleased to see that generally the existing statutory debt solutions are working well for those they were designed for. Change is required however, and we intend that our recommendations – underpinned by principles of justice, responsibility and future-focus – put Scotland on track to have the most effective and compassionate personal insolvency regime in the world.

This report contains 52 recommendations, and we summarise key themes as follows.

It is vital that the regime does not operate in a silo. Increasingly, problem debt is deeply interconnected with other issues people face, so we include a strong focus on better joined-up services, as well as calling for a more consistent and comprehensive approach to income maximisation as a key element of all advice delivery.

Significant challenges exist in accessing advice, particularly for minoritised groups. There is not sufficient capacity to meet need, and greater efforts must be made to tackle cultural barriers to advice seeking. A landscape is needed where independent and specialist advice is available and mandatory before accessing any solution. We recommend broad measures to enable this. We also recommend a ‘tell-us-once’ initiative is introduced across relevant agencies to improve people’s access to advice and reduce duplicated effort for everyone.

Detailed research will be required to understand the need for debt advice and solutions across Scotland. This should be mapped thoroughly in partnership with the Money and Pensions Service (MaPS) and local stakeholders, alongside a full assessment of actual demand, which can then allow for an assessment of resource requirements in the context of a long-term strategy to increase capacity and ultimately meet the need for advice across Scotland. We also call for a strong focus here on fully utilising existing technologies to radically scale-up access and efficiency.

The language used to talk about debt and insolvency must change, as it currently risks compounding blockers to people accessing advice and proceeding with solutions. It should reflect changing social values, actively reduce stigma and make solutions more transparent, while continuing to reflect the seriousness of the choices under consideration.

The rules around insolvency are not being consistently applied by all stakeholders - we observed particular issues in some UK-wide organisations. We propose that new and enhanced relationships are put in place between devolved and UK-wide institutions, in particular between the Accountant in Bankruptcy (AiB) and the Financial Conduct Authority (FCA). This will be vital to promote consistently high standards of creditor behaviour and ensure that FCA regulated firms fully embody what is required of them under Scots law.

We have also found that the regime is not serving the needs of self-employed people in Scotland consistently well. Collectively, self-employed people make up an enormously impactful and valuable part of the Scottish economy, with the sector being a key source of innovation and employment. As a result, we believe they should be a core focus of work that arises from the review. It is clear to us that amended or wholly new solutions, sources of advice and partnerships are required to meet the needs of self-employed people experiencing financial difficulties. These should be co-designed, as a matter of urgency, with self-employed people, their representatives and existing sector stakeholders, including Business Gateway.

In reaching the conclusions of this work, we have taken great care to consult widely and gather as much data and evidence as is reasonably possible. This included two periods of open consultation, detailed desktop research, stakeholder interviews and direct consumer research. This level of insight and evidence gives us confidence that the recommendations are highly relevant to the landscape and have the potential for significant impact if implemented well.

We give heartfelt thanks to everyone who has engaged in the project and enabled us to get to this point of delivering our findings and recommendations. We also record our deep thanks to the Minister for giving us the autonomy to undertake this review in a fully independent way.

In a review such as this, and in a sector that accommodates such a broad range of views, it is unlikely that everyone will be happy with all our recommendations. However, even within the diversity of views, there is a shared passion amongst us all to make a difference for people in debt and help deliver a world-leading regime that Scotland can be proud of. That shared passion will be needed in making the next steps arising out of this review a success, and we call on all stakeholders to engage positively and pragmatically in taking these recommendations forward. Thank you again to all who contributed to the work - please do grasp the opportunities that will now emerge.

Colin Kinloch 

Yvonne MacDermid OBE 

Craig Simmons