One thing that occurred to me after giving evidence to the Scottish Parliament’s Economy Committee inquiry into Protected Trust Deeds last week was how it no longer felt that credit unions were the only ones talking about this. Indeed, though I was delighted to have been invited to share our experiences with the committee, I sensed the MSPs in the room had already been persuaded enough by what they had seen in their constituency surgeries.
When ABCUL launched a Call for Evidence on insolvency matters in 2018, it had been clear to me for some time that there was a real concern within our membership about the growth in Individual Voluntary Arrangements (IVAs) in England and Wales and, in Scotland, Protected Trust Deeds (PTDs). However, it wasn’t really a numbers game – many of the case studies our members sent me seemed to me to be utterly shocking. And same issues were showing up again and again – misleading advertising, eye watering fees, completely unaffordable proposals which credit unions usually have no choice but to accept. In the highly regulated financial services environment that we have in the UK, I was astonished at how much money was being made out of society’s most financially vulnerable individuals.
At our conference last year we launched a paper setting out what our main concerns were, and what we would like to see change, and we’ve made it a top priority ensure this happens. Despite devolution in this area, it’s clear that the trends we are seeing are apparent across England, Scotland and Wales, and so ABCUL is asking both the UK and Scottish Governments to act.
Over the coming months we will see what, if any, changes there will be. The outcome of the Scottish Parliament Economy Committee’s recent inquiry into PTDs is likely to be influential in the Scottish Government’s decision on what reforms need to be made to be made. The UK Government last year consulted on whether the current system of regulation – which enables Insolvency Practitioners to be regulated by their own professional associations – needs to be replaced. It feels to me that there is a growing consensus that the current system, and the exemption of FCA the insolvency professional enjoys – is not fit for purpose.
I sense that the coming months could see some real movement on this - we’ll be continuing to monitor this issue closely.