Scottish Government opens consultation on reforms to statutory debt solutions and diligence

The Scottish Government published a consultation on 12 August 2022 seeking views on proposed reforms to Scotland's statutory debt solutions and debt recovery mechanisms, known as diligence¹. The proposals respond to recommendations from stakeholder-led policy reviews that have now concluded¹.

The consultation covers the Scottish statutory debt solutions and diligence, and sets out the Government's response to the review recommendations alongside the work it intends to take forward¹. The publication is a consultation paper from the Economic Development Directorate and the Tackling Child Poverty and Social Justice Directorate, with the ISBN 9781804357941¹.

In a ministerial foreword, Tom Arthur MSP, Minister for Public Finance, Planning and Community Wealth, wrote about the context for the review, citing the COVID-19 pandemic and what he described as a cost of living crisis placing many households under extreme financial difficulty¹. He said unsustainable debt would be the "regrettable consequence" for many¹.

The foreword also stated that reforms introduced in 2015 placed high quality consumer debt advice at the centre of the system, and that reforms introduced immediately before the onset of the pandemic had enabled the Debt Arrangement Scheme to grow, allowing more people to take control of their debt through a manageable payment programme¹.

On the route for the proposals, the Minister wrote: "My intention is that these proposals are considered either for inclusion in a future Bill before the Scottish Parliament or to be implemented through secondary legislation or administrative measures, where appropriate."¹

The consultation invites feedback from anyone interested in Scotland's debt solutions and debt recovery mechanisms¹. A contact email for the consultation is given as policy@aib.gov.uk¹. The publication does not set out a closing date for responses in the material available¹.

Why it matters for households

The consultation concerns the statutory routes available to people in Scotland who cannot repay their debts, and the mechanisms creditors can use to recover money¹. Any changes would follow the consultation and would take effect only if taken forward through a future Bill before the Scottish Parliament, secondary legislation or administrative measures, as the Minister set out¹. The Debt Arrangement Scheme, described in the foreword as the UK's only statutory debt repayment solution, is among the systems under review¹. The proposals respond to recommendations from reviews that have already concluded, so the consultation stage is the point at which the shape of any reform is still open¹. Households in Scotland dealing with problem debt, and the advisers and creditors working with them, are affected by the scope of the solutions and diligence rules¹.

What happens next

The consultation is open for views, and the Government has said it will consider the proposals for inclusion in a future Bill before the Scottish Parliament, or for implementation through secondary legislation or administrative measures where appropriate¹. No date has been reported for the close of the consultation or for any legislative step¹.