‘Scotland’s personal insolvency market not giving consumers a fair deal’

Scottish insolvency practitioners are being urged to make available to Scottish consumers a rarely used legal remedy which allows their home to be protected whilst providing repayment of their debts.

The remedy, a type of Protected Trust Deed was enacted by the Scottish Parliament in 2010, but since then has rarely been used, the Govan Law Centre (GLC) has said.

The charity says it is not offered by the majority of private insolvency practitioners, who are the only people able to provide the service, and this often means Scottish consumers grant trust deeds that place their homes at risk despite being intended to help them.

GLC’s Personal Insolvency Law Unit has come across a number of cases, where people have entered Protected Trust Deeds, in the belief their homes are safe, only to discover later the trustee is raising a court action to sell the homes.

GLC Principal Solicitor, Mike Dailly said: “It’s routine in the rest of the UK for consumers to enjoy protection from their home being repossessed through Individual Voluntary Arrangements. We don’t think the Scottish personal insolvency market is operating competitively.

“Unless firms start to offer all of the available options to Scottish consumers Govan Law Centre believes there is a case for the Competition and Markets Authority to undertake a market study of the sector in Scotland,”

Writing in a blog published today by Scottish Financial News, project manager, Alan McIntosh said: “Scottish debtors are getting an unfair deal. Their homes are being placed at risk because they are being denied solutions that are enshrined in legislation. It’s time for change”.

The call by Govan Law Centre, which follows on from a recent report that exposed many of the failing of the Scottish Personal Insolvency industry, has been driven by the fact in other parts of the UK, banks and credit card companies agreeing to to disregard as much as £20-30,000 equity in debtor’s homes in return for an extra year’s contribution in Individual Voluntary Arrangements (the closest comparison to a Scottish Protected Trust Deed).