 Welcome to the 30th meeting of the Economy, Energy and Fair Work Committee for 2018. I ask everyone to turn the electrical devices to silent or off if they might interfere with the sound systems. We have received apologies from committee member Angela Constance and Willie Coffey is here in her stead as substitute, so I will invite him to declare any relevant interests. Thank you, convener. Nothing other than what's already on my register. Thank you. Item 2 on the agenda is a decision by the committee to take items 5, 6 and 7 in private. Are we agreed? Yes. Thank you. Now, we take evidence today on the damages investment returns and periodical payment Scotland bill and from today the Minister for Community Safety, Ash Denham. Welcome to the committee. Good morning, committee. Having sat on the economy committee, it's nice to be back. Good. We'll see how matters unfold. I meant nothing untoward by that. You have a statement before we commence, but I'll introduce the other witnesses first and then invite you to make your statement. We have Jill Clark, civil law and legal system division Scott Matheson of the legal directorate Alex Gordon of the parliamentary council office Frances McQueen, civil law and legal system division of the Scottish Government. How good it is to have you back at the economy committee and I'll invite you now to make your opening statement. Thank you, convener. Thank you very much for inviting me this morning to give evidence on the damages investment returns and periodical payments Scotland bill. As you will know, part 1 of the bill provides a changed methodology for setting the personal injury discount rate and allows courts to impose in certain circumstances very periodical payment orders. It follows quite a lengthy period of consultation on this issue due to a range of criticisms about the current methodology. The bill is therefore intended to address some common concerns about the fairness, clarity, certainty, regularity and credibility of the method and also the process for setting the rate, which emerged from the consultation on this topic. The types of personal injury cases which will be impacted by this legislation are not high in volume, but they are at the serious end of the injury scale. The PIDR, the personal injury discount rate, is therefore of significant importance to both pursuer and also defender interests in personal injury damages awards for future pecuniary losses. As you have heard in the evidence sessions, both interests have very different perspectives on how best to achieve and what will deliver the 100 per cent compensation to those who have suffered significant life-changing injuries and put them back in the position that they would have been in, but for the injury. For a range of reasons, this process is not an exact science. In fact, it is inevitably imperfect, as you will have heard in the evidence that you have taken. Without the benefit of foresight, it can never be anything other than an approach that is intended to provide the best possible assessment for the broadest range of cases. The policy that is delivered by the bill in respect of the PIDR is intended to strike a balance. It makes provision for regular reviews. It sets out a transparent and credible process that will ensure much-needed certainty and also clarity in the law. Part 2 relates to periodical payments, principally under periodical payments orders. These PPOs are alternate means of paying damages for future losses to that of a lump sum. In some cases, it may be that a pursuer has a straight choice between taking a lump sum or a PPO, but it should be stressed that it is not always the case. The two should not be seen in that light, as has possibly been suggested in earlier evidence sessions. I look forward to any questions that the committee has about the principles of the bill. Thank you very much, minister, for that opening statement. If I might start with one or two questions, you mentioned the uncertainties that are involved in this area, and I think that that is recognised on all sides and by the committee indeed. It may affect the notional portfolio and the methodology used to create that. One of the issues that has been raised is the question of how the notional portfolio can be representative of the needs of the hypothetical investors. I suppose that the notional portfolio and the hypothetical investor indicate some uncertainty in the first place. Is the methodology in terms of setting out the notional portfolio clear enough? As you will have seen, the bill sets out a portfolio. It has asset classes and percentage holdings that are designed to meet the needs and characteristics of the hypothetical investor, which is laid out in the legislation, so we will not go over that now. The hypothetical investor will have a series of objectives. They will be properly advised, and their objective will be in securing the investment of the award to cover their damages, losses and expenses. They will then make withdrawals over the period from the fund to cover their losses and also their expenses. Over the time period, those withdrawals will exhaust the fund. The portfolio is designed to meet the very specific needs of the hypothetical investor, and it was arrived at on the basis of professional advice and expertise. For that, GAD carried out detailed analysis of a number of funds that were categorised as low risk. They were categorised that way by a firm called Morningstar. That is a third party investment research firm, which is widely recognised across the industry. The notional portfolio was then built on the basis with reference to those funds. The Scottish Government believes that it would therefore meet the needs of an individual that is in the circumstances that we are describing. Another thing for the committee to note is that, in response to the 2017 consultation, there was a small majority of the view that the idea of a mixed portfolio of assets was the right way to go, and that it provides that balance between flexibility and the best way of managing that risk. It was also suggested by some of the people that responded to the consultation that they thought that they also most closely matched the actual behaviour of the pursuers when they are investing. I hope that that answers the question for you. Do you have a view on how often you will need to use the regulation-making power to change the contents of the notional portfolio and, in fact, who will monitor market conditions to decide when and if that needs to be done? The intention is obviously to review the portfolio and the adjustments, although we haven't spoken about them yet this morning, ahead of every time there is a regular review. That would give us the opportunity to change them if we thought that it was necessary to do that and that they were not meeting the needs of the hypothetical investor at that time. Additionally, in the bill there is the power for Scottish ministers to also call for an out-of-cycle review, so that gives a little bit more of a failsafe on that, so that it should always be matching up to the economic conditions. In terms of monitoring market conditions, we will envisage that as being working in partnership with the Government actuary on that so that we will both be monitoring conditions and working together, so that we have quite a good open communication on that matter and that way that we think that it will constantly be up-to-date. Some have suggested that the way that matters are set up in regard to the discount rate, so basically the previous assumption or current assumption that the discount rate should be calculated on a risk-free basis moving to the assumption that it should be based on a cautious investment strategy, which may fit into what you were talking about in terms of safety and flexibility in the notional portfolio. Does the minister have a view on whether or not that is transferring investment risk to the pursuers and, if so, unfairly, or is the balance met correctly and, if so, why? I watched some of the evidence sessions and I did see that that was a question that was raised in the previous evidence sessions, but our belief is that the portfolio in the bill is very cautious for that particular reason. You will also have heard evidence from the other side that the portfolio is equity light and overly cautious, and that is, obviously, according to the defender's interests. The Government is trying to tread a very careful line between the interests on both sides to try and tread a very careful line through the middle and make sure that we strike the right balance here. However, the Scottish Government accepts now that it is appropriate to move away from the approach that was taken in Wales versus Wales from the index links guilts in order to move to this very cautious but low-risk portfolio. We do recognise the need that the hypothetical investor will need to take professional advice on that to tailor that to them, but we are also making further adjustments as well, so that we reduce the risk to the investor. Wales versus Wales did not force pursuers to invest in a particular way, nor does this legislation either. What pursuers actually do really is irrelevant. I think that that will have come out in some of the earlier evidence that you have taken, but the method is intended to provide a standardised approach that will apply across a broad range of cases. A couple of questions on the adjustments to be made to the discount rate. We have heard some evidence that the 0.5 per cent adjustment for tax and investment advice may not be sufficient given market uncertainties and other unknowns in the process. I wonder whether the minister could give her views on whether that 0.5 per cent is a reasonable level of adjustment. We saw views from GAD on this very topic about the appropriate level of adjustment for tax and investment management costs. Although GAD considered that a reasonable allowance for those type of things would be somewhere in the region of 0.5 per cent, it was up to 2 per cent at the other end of that. It was a range. It was of the view that the lower end of that range would be likely to be more appropriate. It gave a number of reasons for that, one of which is that it thought that investors would typically shop around to get the best possible rate. GAD, in the regard report, suggested that the Scottish Government should seek a bit further advice on that issue, on the level of the adjustment, and that work is being undertaken on that at the moment. I do not know whether any of my officials would like to say a little bit more about that. The other reasons that GAD provided for opting for the lower end of the range was that it is likely that the portfolio that we have is quite full of passive funds, so that it does not need a lot of management for that reason. The shape of the market just now means that there is not pressure on higher-tax charges as well. The fact that there is another adjustment in the bill also compensates on the way down as well. There was a range of reasons that they thought that it was reasonable, but we are looking at it further. You mentioned the further deduction. That is the further margin of 0.5 per cent to reduce the risk of underperformance. We have heard evidence, and I think that the Scottish Government has said itself, that there might very well be overcompensation as a result of the further margin being introduced as an adjustment. Does the minister accept that this is a potential departure from the 100 per cent compensation principle? That is a good question. No, we do not think that it is a departure, so that is the first thing to say about that. It will be clear to the committee by this point that I have said it before, but this is not an exact science. There is always going to be some sort of probability of either undercompensation or overcompensation for a whole range of factors, and that is why the adjustments are there. The particular adjustment recognises that an investment however cautious it is is always going to carry some sort of risk. Obviously, the methodology that we are using is acting as a proxy, and a proxy is not able to take account of individual's needs because things can vary. That is the reason for that. The further adjustment is to improve the chances of the pursuer having the right amount of funds to cover them. It is worth stressing that, when we talk about this idea of undercompensation, we are also talking about the likelihood or the probability of it happening, but there are not absolutes. There is risk involved with this as well, no matter what the award basis is, but there has been some analysis done on this, so I will just share this with the committee. The analysis around the distribution of returns generated by the investment portfolio in the bill shows that if the return were not to be adjusted in the way that we are describing, it would result in a 50 per cent chance of the pursuer being undercompensated and a 50 per cent chance of the pursuer being overcompensated. The question at this point is whether a 50 per cent chance of undercompensation would be acceptable, and I would say that it is not acceptable. That is why the further adjustment is needed in order to reduce that risk of undercompensation. Just one supplemental on that. What evidence base was there to support the actual figure of 0.5 per cent? That was through the analysis that GAD carried out for us in applying different margins of justice to drive down at the lower percentiles the risk of over or undercompensation and getting to a point that was more acceptable than the 50 per cent. I think that we sent GAD's report to the committee and that's on the website as well, so it's laid out there in a tabular form. Can you explain why the 30 years was chosen as a period over which a hypothetical investor would be investing? The investor's damage profile is 30 years. There's no authority to base that on, but it's merely chosen because it's a useful duration that's neither too short or too long. This is also remembering that this is meant to cover a broad range of cases, so there will be cases that either enter the scale and so the 30 years was taken as the correct amount for the damage profile. To what extent do you believe that this is going to impact negatively on pursuers, for example, who have a very short life expectancy? It's possibly true that shorter awards may have a greater chance of undercompensation, so there has been some work completed on this to date. So far, it's indicating that not more than one rate would be necessary at this time. However, the bill also provides an opportunity for the possibility of dual or multiple rates being set perhaps in order to address that. I wonder if the officials would like to add a little bit more to that answer. We asked GAD to model it on a 30-year basis, on the basis that that was an average, but they also looked at 15 years and 50 years. Again, it's in their report that there is a sort of graph showing the difference of the shorter duration and the longer duration, and ahead of each review they'll do the same thing. On their advice, if the differential gets too big, that would point to it being more sensible to have more than one rate for a shorter duration and a rate for a longer duration, but it hasn't pointed in that direction at this time. The bill leaves it open for more than one rate to apply in the future should the analysis indicate that it would be better to do so, fairer to do so. The bill also, in section 1, makes it clear that the court may take a different rate of returning to account if a party to the action shows that a different rate is more appropriate in the circumstances of the case. I presume that that was always intended never to bind the hand of the court. Yes, absolutely. You can look at the particular circumstances of a case and decide that the rate that was set isn't appropriate. They can do that now, that's the existing law, and we've just retained that in this bill. It's used very rarely, but nonetheless it is there. What kind of circumstances is it used in? I think that if they thought that the circumstances of the particular case were so outwith the broad application that's been applied that it would be more appropriate for another rate to be applied, it would have to be at a kind of extreme end. If ministers were minded to set more than one rate, what kind of circumstances might lead to that and how would that apply in practice? Let's just say that we haven't come to that conclusion yet. No, no. So if, through the further evidence that we gather, it is clear that maybe the shorter awards might have a potential for undercompensation, then they say something that we're looking at. We're going to be getting more data from GAD as Jill has said, and we'll need to look at that in detail and see how that would work. If we think that there is a need for different rates, then that is something that we are looking at. So one factor might be different durations of life expectancy. Are there other circumstances that might lead to ministers concluding that different rates should be set? It generally is the duration of the award as opposed to life expectancy. Other jurisdictions that have more than one rate will have a different rate for, say, 10 years or 15 years and a different rate for above that. They choose a duration, and they're different across jurisdictions. There doesn't seem to be any consistency there, but you would settle on something where the differential has been created. You'd be trying to close that down, close that gap in where you apply the two different rates. Or, indeed, you could apply three rates. There's nothing to stop multiple rates being applied, but it would have to be because the actuarial advice has suggested that that's the best way to go based on that kind of analysis and evidence. Okay, so it's basically about life expectancy and the duration of the award. There's no other circumstances such as the capacity of the injured person or their age at the time of the injury or anything else that might lead to different rates. I think that generally that gets tied up in the duration of the award, because it's given for the point at which they'll either improve or get better, or where their life will have terminated. Okay, thanks. If I might just follow up on one aspect of that, the 30-year period. Now, the Association of British Insurers have submitted on that. Their suggestion is that 46 years would be more appropriate because they say that that period is the mean duration of future damages in those cases where the discount rate is a significant factor. They say that the GAD report demonstrates clearly that if a more appropriate period of 46 years were to be applied, the probability of undercompensation decreases. They say that such an explanation is the use of the 30-year period is required. I'm just wondering if further comment could be made to answer the point about the probability of undercompensation being higher if one uses a 30-year period and also if there's a specific methodology that was preferred or considered to be preferable to others in coming to that 30-year period. Okay, I'll ask my officials to give more detail on that answer. I think the same. It's almost the same answer as before. Less or higher or lower, 30 is a kind of average, if you like, at an appropriate level. They've applied the same analysis to each duration. We understand that they put it through their economic scenario generator and that that pops out the figures at the end so that there's no difference applied. It's just simply applying a different duration of award. It is usually the case that the longer they award, the more time someone has to recover from any dips in the market and get back into a better place than over a shorter award. However, the figures that they've provided don't indicate that more than one rate is necessary at the moment. If that hasn't answered your question, we could... It may be that you could give further explanation in writing to the committee if that might be helpful. The 30-year period, as you say, is an average. I suppose that the question is an average of what and why the different factors were chosen for that. However, if further explanation and writing could be provided, that would be appreciated. You may be happy to write to the committee on that with further information. Thanks, convener. Building on the question that's been going already, the question of political accountability and who makes all of these decisions. From what I understand, the Government will be more involved in this portfolio, but the actual discount rates are much more under the control of the actuary and so on. That's a slightly different system from England. How do we get the balance in there or could we go one way or the other? Part of me thinks that, while in this world of automation, couldn't we just automate the whole thing? The portfolio could be tied to the market, the discount rates could all be tied by formulas and we would have no political involvement, which sounds quite good. On the other hand, some people would like to put you up in the chamber and then we can all ask you questions and shoot at you on those things. How do we get the balance in there? That's a very fair question. There has been a little bit of comparative work done on this, with a view to looking at other countries and to see how they do things. There is a huge variety across different jurisdictions in how they approach that. In some, it's a legislator, in some, it's the judiciary, in some, it's a hybrid involving both in different amounts. Obviously, this is the decision where the policy choices come into effect. We've taken the policy decision to place the duty to review the discount rates onto the government actuary because we think that that is consistent with the overall policy of reforming the law in this way so that the method and the process are clear, certain, fair and transparent. It's important to mention at this point that the 2017 consultation responses, as part of those, were there more support for options that didn't involve ministers, so it seems to be fairly consistent with what the consultation responses were. I think that the Scottish Government view in this case is that, with regard to determining the rate, it is purely an actuarial exercise. There is no need in that case to exercise political judgment, and so the decision has been taken to give it to a suitably qualified and credible professional. What that will give us at that point is that the government actuary has been selected because of its expertise in standing in this area. It will publish its reasoning along with the rate, and that will allow a complete transparency of the process. We think that that is the right approach in this case. Would Gill Llywydd like to add anything further to that? Probably not, no. Okay, so my follow-up on that one then, broadly persuaded by your argument on the rate, is why would that not be the case also for the portfolio, because the suggestion has been made that, obviously, we've got a nice Government at the moment, but in the future we might not have such a nice Government, and they might manipulate the portfolio. I think that that is a fair point, and that's why, with the rate, it is really good to have it removed from the political arena, which is not the case in England and Wales, as I'm sure the committee are aware. Taking it away from the people that would seek to influence or ministers being under pressure in that way is really good. I think that in terms of the methodology for the portfolio, that is something that I think needed to be developed over a longer time. It needs more analysis, but the portfolio is able to be reviewed by Government ministers in order to make sure that it is matching up to economic conditions as well. That will be subject to scrutiny by Parliament as well. We think that that adds an extra level of credibility to the process and transparency as well. I was going to say that the constant in the bill is the description of the hypothetical investor, and the portfolio can only be changed in line with the hypothetical investor. Somebody couldn't come along and suddenly make it a very risky portfolio because that wouldn't meet the needs of a hypothetical investor, so that's the grounding part of the bill. The powers to change the portfolio and the adjustments are meant simply to keep them up-to-date and irrelevant as investment markets change, but the constant is the descriptor of the hypothetical investor, which would have been agreed by the Parliament. Just on a technical basis, that's part of the navigation around the bill. The minister and the Government have put all those figures before you, so ultimately, if the bill is passed, eventually the Parliament will have endorsed the figures at the outset, but even if ministers were to come forward with regulations to change any of this, the 30 years or the figures in the notion portfolio or the figures in the standard adjustments, all those regulations are subject to the affirmative procedure, so although ministers would be bringing it forward, it would need parliamentary endorsement any of those changes. That's helpful, thanks very much. You've said, minister, that we could end up with a different system. We're obviously going to have a different system from Scotland and England. Is that a problem? Does that cause any concern? Clearly, some of the insurers, for example, are operating throughout the UK, if not beyond. I don't have any practical concerns about that. Obviously, we did consult jointly with the Ministry of Justice on setting the PIDR. Obviously, the Lord Chancellor is responsible for setting it in England, and the Scottish ministers are responsible for setting it in Scotland. I think that it was appropriate that we took this work forward separately in that case. It may or it may not result in different rates being set north and south of the border. We don't know at this time how insurers may react to that in terms of setting their premiums, but an important point to note on that is that the number of the types of catastrophic high-value cases will be quite low, and it will be quite small in relation to overall the insurance business. I don't know if anyone else wants to add any more into that answer. To move on from that one, insurers are one of the categories of defenders in those cases, but the NHS is another. A lot of us are probably sympathetic to the idea that we should be a bit more generous to the injured party, but the reality is that that would have an impact on the NHS. Presumably, if the NHS is paying out slightly more than elsewhere, we have to find that from the NHS budget. Are we getting the balance right? Is there a problem for the NHS budget? That is a good question, but, because of those changes, the higher PIDR rate means that, if the same exercise were carried out simultaneously under the current methodology by reference to the Government guilds, the NHS is going to produce awards that are on average closer to the 100 per cent compensation. With regard to the present system, that should result in less overcompensation. The cost to defenders, and you mentioned particularly the NHS, is a major factor. The cost to the NHS, in that case, should be less in terms of the awards that they are being required to make. You will have heard from the NHS and other stakeholders as well that it is important to them that this facility continues to settle future losses by way of the PPO's and that they are supportive of that. I think that they are welcoming the changes in the bill accordingly. Just to clarify, when you said that it would be less for the NHS, less than the NHS is currently perhaps paying, perhaps more than the equivalent would be in England? At this time, we do not know, because we simply do not know what the discount rate is going to be in England and Wales. We will not know till the end of their review, because that is when that happens. It is difficult to say. We will keep it under review. I suppose whether or not we have a nice Government at the minute may depend as to who you ask and which Government the deputy convener was referring to, but I will put that to one side. May I just clarify on one point that, as you said minister quite rightly, there are different approaches that could be taken to this? Is the intention of the Government to effectively have independent decision making by having the UK Government actually dealing with this one particular issue? To take political influence out of that particular— Absolutely. It will be independent of political interference, it will be independent of ministers and it will be a fully transparent process. Thank you. Andy Wightman had a brief follow-up to Gordon MacDonald after that. Just following John Mason's line of question, I want to clarify, maybe I have missed something here, but the Government actually will be responsible for setting the rate, what ministers ultimately, but the Government actually will be the professional adviser in that regard. In terms of any potential changes to the portfolio, there are no provisions in the bill about what advice ministers will take in that regard. That is a role that is given exclusively to ministers. Do you not think that there might be a role for the Government actuary in that as well, or am I reading it? No, there will be, because the Government would take advice from them on that. There is no statutory provision as far as I can say for taking advice, or am I wrong? There is no statutory provision to that effect, but there is no statutory provision in many areas where the Government does, as a matter of course, take appropriate professional advice in a range of circumstances. I was wondering, because the bill does make it clear that the Government actuary, unless the Government appoints somebody else, is responsible for setting the rate. It makes that clear, but it does not make clear what role any other party like the Government actuary would play in potential changes to the portfolio. The function when it comes to the actual determination of the rate is a function that is conferred upon the Government actuary. There is provision in the bill to allow, by regulations, the Scottish ministers to change that in due course if it was necessary for somebody else to do that. At that stage, the Government actuary's role is indeed one of decision making, but decision making is within a very narrow range of parameters that are set out in the legislation. The Government actuary at that stage is not acting as an adviser to ministers where the ministers determine the rate. The Government actuary will be determining the rate producing a report, and it is the rate that is set out in that report that will be the rate that the courts are to take into account, subject to the discretion that has been referred to earlier. The statutory provisions are there because the actuary is a decision maker, and that has to be made clear. However, there is no statutory role for the Government actuary or anybody else in advising ministers on the make-up of the portfolio, so my question is, should there be or should that be left totally to the discretion of ministers? With Parliamentary oversight? Well, of course. All those will be subject to regulation making powers in Parliament, but it will be clear when an affirmative procedure comes forward with something like this. There is a huge depth behind that. One cannot expect Parliament to drill down on that. To assist Parliament in that job, I am just suggesting that there might be merit in making statutory provisions for advice, such that advice can be interrogated in exactly the same way as the GAD report can be interrogated by injured parties at the moment. I think that I would come back to the point that Gill Clark made earlier, that because in the legislation it has to take into account the interests of the hypothetical investor, any changes to the make-up of the portfolio are going to bear that in mind, and then it is going to be further scrutinised by the Parliament. I am fairly comfortable with that as it sits. Does anybody want to add anything more to that? I think that Jamie Halcro Johnston had another brief follow-up on this point, and then we will move to Gordon MacDonald's. Thank you very much. It is just a very, very quick one. In the financial memorandum paragraph 43, it says that a 0.25 per cent difference could add £2.5 million to the cost of claims against public bodies in Scotland. One of the in South Lanarkshire Council submissions to the finance committee, they basically suggested that they would expect the Scottish Government to cover any fluctuations in costs in terms of either claims against public bodies or increases in their premiums. Is that something that the Government has looked at and is ready to do? We are keeping that under review, but I will ask my official to give you a little bit more detail on that. I think that it is the same as the minister said earlier. Relatively speaking, we expect the discount rate to increase under this method. Therefore, costs to defenders should decrease, but of course we will keep the matter under review. Gordon MacDonald, thank you very much. In terms of the discount rate review period, during previous evidence sessions, it has been suggested by some that five or even seven years would be a more suitable review period for the discount rate. What is the justification for the bill having a review period of three years? That is a good question. The legislation in general was meant to make sure that we do not get into the situation that we have had before, where there were very long periods between reviews. It was considered that this period, this three-year period, would be a suitable compromise across that. The Government is certainly opening to consider alternative periods—maybe that would be a five-year period—if that would be more acceptable. I would be interested in the committee's views on that in the stage 1 report, if that is something that the committee is considering. We also heard that, in some personal injury cases, it can take several years to settle it. There is a concern by some that either parties involved in the case could try to either delay or speed up settlement to take advantage of what the rate change is going to be if they know in advance what that rate change is going to be. Is there any safeguards that could be put in place within the bill to try to minimise that? I would say that the three-year period, for that very reason that you have just outlined, would seem to me to strike that balance. If it was happening every three years routinely, gaming the system type approach possibly would not occur. The other thing to point out is that, even though a regular review is being carried out every three years, it would not necessarily lead to a change in the rate every time. We have to consider that as well. Also, the Scottish Government, or it is written into the bill that ministers, would have the opportunity to carry out an interim review. If it was necessary at any point, let us say that economic circumstances changed drastically and suddenly the rate was not appropriate, that would also be a possibility to keep it up to date. I would be interested to hear what the committee's views on that. We have thought that the three-year period would be appropriate, but I would be interested to hear other views on that. Previous sessions that we have had have been quite a discussion about PPO's and the impact of them. Do you think that the provisions in the bill are sufficient to increase the actual use of PPO's in Scotland? Does the Government have any other plans to encourage their use? The number of cases that have the potential to have a PPO is really quite small to begin with. I do not think that we are anticipating a large increase in the numbers of take-up, but we are hoping that providing courts with the option to encourage people to use them, where they are appropriate, might increase slightly. We also think that that might have an influencing effect. On cases in which they do not go to court but are being settled by agreements, even though they are not being forced by a court order to use a PPO, they might consider to do one anyway. We know that they are not suitable in every case, so they will not be suitable for all pursuers. We know that for a variety of factors some pursuers may prefer to have a clean break. They will not want to enter into that. Also, not all defenders are going to be sufficiently and financially secure to undertake them as well, but we do hope that there will be a higher use of them, regardless. It seems to indicate that pretty much 100 per cent of PPO's currently are through the NHS and virtually nothing else wise. Do you see that changing? I think that, marginally, people might be more encouraged to use them, but the numbers are not, as the minister said, very high in the first place. The NHS is the predominant user of them. The numbers are not high, but, of course, the actual value is much higher, significantly so. Last week's evidence session, the committee noted that the bill's provisions on reasonable security do not appear to cover the Motor Insurance Bureau. Was that a deliberate emission? If so, what was the thinking behind it? The provisions of the bill allow Scottish ministers to add additional bodies to the list. I think that that would be the process for adding the Motor Insurance Bureau to that list, because I know that that is an issue that has been raised by a number of the consultees during that process. There was a little bit of concern around Brexit in relation to this, particularly the timing and the fact that it would coincide with the later stages of the bill's parliamentary passage. It was decided that, including a power for Scottish ministers, to add or to remove, but in this case probably to add MIB to the list, seemed like the most appropriate way or the most sensible option in this case. Are you saying that the Government is going to consider it or the Government will do it, adding them to the list? I think that we are just going to wait and see, because the courts found them to be a secure provider of MIB, but it was because under article 4 of the second European directive on Motor Insurance that that kind of contributed to the courts thinking that they were a secure provider. So we just want to see what would replace that in a Brexit world. Once we were confident about that, MIB could be added to the list. It is just the lack of clarity. If that is no longer in place, what would replace it? It would be something that the UK Government would be putting in place. So we would have to wait for the UK Government to give some sort of indication on that. So at the moment you could not add them on the basis of where you are situated at the moment. I think that one of the factors that contribute to them being thought of as reasonably secure by the courts is about to change, so we just think that it would be a bit premature. The provisions of the bill about reasonable security set up an assumption for the court. So that is the idea there being that it allows the courts to proceed on the basis that that defender or that payer is going to have sufficient financial backing during the course of an award to ensure that the PPO payments themselves are sufficiently backed. Setting up an assumption does not exclude the possibility that somebody who is not a defender or who is not on that list in the statute could persuade the court that they have sufficient financial backing. So by them not being in those provisions at the moment does not prevent them in particular cases making the case to the court that they should be taken as being reasonably secure. I would say that that is what the National Insurance Bureau does at the moment. They have to convince the court on a case by case basis, but normally the court finds that they are secure. The committee has heard evidence that the risk of satellite litigation would be reduced if the wording on the bill around seeking a variation of a PPO mirrored existing legislation is that something that the Government is considering? We have looked at this and we do not think that the model in the 1982 act is an appropriate fit here, but I will let the officials give you a bit more clarity around that. I hope that I am answering the right question. Just as a drafting technician, I find it very useful to look at other legislation by way of example, but I am also very wary of picking up something as a precedent that might not be the best fit for the particular context that we are dealing with. I am always open minded to how one might go about things, and there is always more than one way to go about anything. Among us in Government, we choose our approaches very carefully in a particular context, like here. The gateway to variation and how variation applies once you are through that gateway is a court must be satisfied that there is a chance of change in the pursuer's condition at some point in the future. Secondly, should that change occur, there would be either over or under compensation. We at the moment do not weigh the amount of change required in the condition or what actual chance it is. That just gets you into the real root of this. Is there likely to be significant under a rover compensation? That is the root of the issue. Perhaps you do not need to measure the amount of risk of change or how much change that will be, because it would be unlikely to have significant over and under compensation if there was not any meaningful change in someone's condition. While you could, on a different day, try to calibrate that differently, I think that the way the provisions—I hope that I can help to put them on the page—go straight to the root of the problem, namely the issue of significant and over compensation. You do not know if you need to cutter that with some other qualifier in the first part of that twofold test. The main bit of the twofold test is the second bit of it. Still on the question of pursuers returning to court to request a variation of a PPO, there have been concerns raised about the costs of that. Perhaps the minister could consider whether she could commit to ensuring those costs fall in defenders, which would be a fairer approach. I think that that is an interesting point that you have raised there. It raises some questions about quacks, about provisions in the Civil Litigation Act, which has obviously been recently endorsed by the Justice Committee and the wider chamber. However, at the moment, we need to look at the interaction of that bill, of this bill and the Civil Litigation Act. We need to consider that further. We would be happy to write to the committee with some further information on that. That would be interesting, because, although we have no feel for how much it would cost for a pursuer to come back for a variation, indications from some of the witnesses were that it could be quite substantial. There is a question of fairness in that. We will be happy to give that a little bit more thought and write back to the committee with our thoughts on that. As the new boy in this committee, I wonder if I could ask a slightly less technical question. I am very impressed with my colleagues' rigor in examining the issue in front of us. You said in your opening remarks that one of the intentions was to try to put people back in the position that they would have been as far as possible before serious injuries took place. Are you confident that the bill will deliver on that objective? Are you confident and satisfied that there are sufficient scrutiny opportunities for the Parliament and the committees to examine that as we go forward? We are. Obviously, the bill has been requested. The principles of the bill have been subject to consultation not once but three times. There is a desire for a change in the law, but, obviously, there was not consensus exactly on some of the policy choices. The Government has been very careful to choose a course of action that was intended to strike the appropriate balance between the pursuer and the defender interests and to make the method and the process for setting the rate as clear and transparent and with an ability to be scrutinised by the Parliament, as you rightly say, as possible. I am very comfortable that it does those things. Any further questions from committee members? Jill Clark, in a previous comment, you said that you expect the discount rate to increase as a result of the bill. Can you explain why? I said relative to what exists at the moment because investment markets have changed since 2017 when the current rate was set. However, the portfolio is of a higher risk than the ILGS investment, so it should follow that the discount rate will be slightly higher if you were taking an even playing field and running both analysis at the same time. The moment that there is overcompensation? The probability of overcompensation under ILGS is quite significantly high. Jamie Halcro Johnston I will ask a very quick question and maybe I will clarify. The Civil Litigation Act passed earlier year cap payments of 2.5 per cent for no win, no fee, I think. That was overturned. I think that there was an amendment by the Scottish Government that allowed that to continue with these one-off payments, but that does not apply to PPO settlements. How do you think that impacts on decisions made by pursuing solicitors to perhaps discourage their clients away from PPO payments? I will ask my officials to give you some more detail on that. It is quite difficult to speak for the entire legal profession. I do not feel that that is an adviser to the Scottish Government. I can really do so. I believe that there are practices that are put in place by at least some firms to ensure that independent actuarial advice has been taken and given to the person who will be the recipient of the damages and to ensure that the decisions on whether or not to take a PPO settlement or a periodical payment settlement rather than a lump sum awards are taken on the basis of actuarial advice and that the steps can be taken to ensure that that advice is independently given to the recipient of the damages rather than being filtered through the solicitor's concern to ensure that the independence of that advice is not skewed by the interest of the solicitor's concern. That is by way of an example rather than stating that as a universal practice. The brave man or woman that claimed to speak for the entire Scottish legal profession indeed. Thank you very much minister for coming in today and I'll now suspend this meeting for a change over witnesses. Welcome back to this morning's meeting of the committee. We now turn to look at the common financial tool Scotland regulations 2018 and we have, as our panel of witnesses, for this part of this morning's proceedings. First of all, Alan McIntosh, senior money adviser from Inverclyde Council, Angela Kazmiercik, financial inclusion team leader of Aberdeen City Council, Nicola Burrell, senior money adviser, money advice and rights team East Renfrewshire Council and last but not least Scott Mill, director of WRI Associates. Welcome to all four of you. Thank you for coming in today. You don't need to press any buttons, that will all be done by the sound desk, so if you want to come in to the discussion and you're not getting in, just indicate by raising your hand and I will ensure that you can come in and don't feel obliged to respond to every question. It would just see how the discussion questions develops. So I'll turn first of all to John Mason. Thanks very much, convener, and we'll have a range of questions, but to start off, one of the arguments for the adoption of the standard financial statement has been that it would standardise procedures right across the UK and I think the argument is that while a lot of creditors are UK organisations are wider, how important is it that we have a standard the same thing right across the UK, because I think it was Mr McIntosh and his evidence made the point that debt has never been treated the same way in between Scotland and England. So how do we balance these off? If I can start, you're absolutely correct. There's never been to use a phrase that's quite common these days, a single market in terms of debt recovery in the UK. Scotland's obviously always had its own distinct legal system. We've had our own debt solutions, we've had our own debt recovery laws, and creditors who operate in the Scottish market, and pretty much they all do, accept that when they're in the Scottish market, if somebody's in debt, then there's separate legal procedures and debt recovery procedures that have to be used. They also accept those separate debt solutions. For example, the debt arrangement scheme, there is no comparison anywhere else in the UK, although you'll probably have learned from the last budget that the UK Government is now looking to introduce and learn from the Scottish Government scheme and introduce a similar scheme in the rest of the UK. I don't think that there's necessarily a need, as per say, for a standardised financial statement across the UK. I don't object to there being a standardised financial statement either. I think that the important thing is that whatever solution it is, it has to be the correct solution for Scotland, and it has to be the correct solution for our system. I say that there's no objection in principle to be a UK standardised financial statement. I accept that it's got benefits for creditors, and if that's possible, then I don't see why we would object to that. I accept that it's got benefits for large organisations, national organisations like step change. They can then operate one system, one computerised system across the UK. Basically, mapping is, there's no need for it. It's got some benefits, but the important thing is that it's a proper solution for Scottish consumers, and it provides fair outcomes for both the consumers and the creditors. Anyone else wanted to comment? I could just add to that. Previously, what we did have in Scotland by practice was that we had one model that was being used with creditors, and one model that was being used specifically for insolvency. Before we had the common financial tool, there were commonly two sets of trigger figures being used in Scotland for different debt solutions. That was an issue, but I don't think that across the UK it's a bigger issue, especially, like Alan says, for people who are doing local debt advice that are working only with Scottish clients. I would add as well that the FCA consumer credit source book, which covers how debt collection practices should be done, still does have a reference to say that creditors should be using the common financial statement, which is what our CFT is based on, or the equivalent. We are still covered in terms of the creditors are instructed to use the common financial statement or the SFS, so there's no real need for one tool. There seemed to be an argument that some creditors were not signed up to the common financial statement and that it was more likely that they would sign up to the standard financial statement. Are you saying that that's not the case? I'm not clear. I don't know if you've had representations on specifically which creditors are going to sign up to SFS. I know that there was a suggestion at the start that public sector creditors would buy into that. However, we haven't seen any evidence of that, and it's highly unlikely, given the fact that, if you have somebody who's on jobseekers allowance, who's over 25, they'll get about £317 a month. That's less than the housekeeping trigger figure for both tools, so we could fairly turn round to a public sector creditor and say, this person has no disposable income by virtue of the fact that they're on benefits. A public sector creditor is not going to take either a token payment or a period of non-payment. They're going to go straight in and try and deduct money, so I don't see—although they've said it will, I think that at the last evidence session they talked about the insolvency service. They didn't talk about HMRC or DWP or local authorities collecting debts, and they're the ones that we struggle with. Just to clarify at the moment, if it's a Scottish public authority like a local authority, are they signed up to the common financial statement at the moment? They're not. It's on a case-by-case basis around local authorities. There's no national agreement, so we have agreements with some departments that we work closely with that they will use that, and they will sign up to that, but that is on a case-by-case basis. There's no national agreement on that. Okay, thanks. No, obviously local authorities, HMRC and DWP, it's only if it's a statutory debt option, they then have to comply with the common financial statement, but I would concur with both Nicola and Alan there. The most people that we see that have local authority debts or DWP, it's people that are claiming benefits, and they would get nowhere near the trigger figures because their income is just not high enough, so they don't use the common financial tool when we're looking at doing just a council tax arrangement or a rent arrears arrangement because they would be paying nothing towards that debt where the expectation is that they should be paying something towards it. So the statement there saying that this would help government agencies that are collecting debt, I wouldn't agree with that. Okay, Mr Millan, did you want to come in as well? I tend to deal mostly with this after the event, effectively, as part of the actual formal and solvency process, so I don't have generally any engagement with creditors prior to that point in the same way as Nicola, Angela and Alan will do. Okay, and then my other point would be, is it practical, and if we did carry on with the common financial statement, Raul and Switching, would that have an impact on creditors? I suppose that if all creditors across the UK start using the standard financial statement, then obviously I don't know if it would have an impact, it would just continue the way it's currently using. In terms of the common financial statement or the common financial tool, they would continue to use the common financial tool the way they're currently doing. They're legally obliged to accept it in terms of statutory debt remedies. Obviously, they would prefer to have the same standard financial statement across the UK, I'll stand the same common financial statement across the UK, but in terms of what would happen in reality, it would just continue. I think that there's also a point that I would like to emphasise is that even if we do have a standard financial statement across the UK, it's not going to be uniform. In Scotland, we have additional layers of guidance in the way that it's implemented, which I think is crucial. Even a standard financial statement across the UK will never be uniform, because the key difference is always how it's implemented in Scotland, and that's where money advisers have really struggled in the past three years. In terms of our regulatory perspective, the financial conduct authority again gives instruction to creditors that they must be mindful of the legal differences in terms of the different debt solutions in Scotland, so there's no reason why they can't have a similar thing to see. They must have regard to the differences when we do a financial statement. I think that colleagues will follow up on some of these. Perhaps I could clarify something with Alan McIntosh. In your written submission to the committee, you talked about what you've also mentioned today about the differences between the Scottish and English legal position, and I think that you've just touched on that perhaps where you said in your position paper that even if Scotland adopted the standard financial statement, it would not result in a common approach being adopted across the UK as the Scottish approach is distinct. An additional layer of guidance is applied to the AIB over and above that, which is applied elsewhere in the UK by the governing body of the SFS. Are you saying that, effectively, even if we adopted the SFS in Scotland, there would still be an additional layer of guidance from the AIB to take account of the different Scottish position? Do you think that that will be a good thing or a bad thing if it's brought in? If I can maybe explain the background slightly, I'll take it very quickly. I've used the common financial statement in the UK in Scotland since 2003. Prior to being adopted as a common financial tool, I supported the adoption of a common financial tool. I still support the adoption of the continuation of the common financial tool in 2015. I supported the adoption of the common financial statement as a common financial tool because it worked well, it was flexible, creditors accepted things quite easily, it was common sense and it did generally provide, in my experience, good outcomes for the clients and the creditors. We didn't take into consideration how the character of the common financial statement was going to change in 2015 when it came in. It was because of the additional layer of guidance that has been brought in, because of the evidential requirements and the verification that we have to meet. Obviously, that is one of your big concerns. I think that it is one of the concerns why, when the common financial tool consultation was carried out, I believe last year, with the accounting bank and obviously it was over some of the responses, the majority of the agencies that responded did not want to see a common financial statement being brought in, because there was a fear that it was going to exacerbate the situation. Obviously, one of your primary concerns at the moment is that we still do not have, as those regulations have been proposed, the finalised version of the guidance for the standard financial statement is still not the same. To me, that is the basis for getting the lessons of the past, which is what happened in 2015. We got the regulations then, we got the guidance, and this time round I would rather see the guidance being brought forward than finalised at the time that the committee makes a decision on those regulations. In effect, you are saying that you would like to see before a decision is taken on those regulations. I have a draft version here, but I would like to see the finalised version. I believe that, at the last common financial tool working group, the decision was taken if those regulations go through. They will create a subgroup in December to look at them, because David Hilford had asked at the last common financial tool working group that we had to go through the guidance line by line and make sure how it was going to work when the standard financial tool was implemented. I believe that the decision was taken if the regulations go through. I believe that that has to be done at the same time, because I believe that it is really important that some of the issues are raised by the guidance, and I can give more evidence than that if the committee wants to, but some of the issues that arise at that guidance are the meat on the bones. I believe that the committee really needs to see that, because there are things about child maintenance, verification and maybe some of my colleagues could expand a bit further on that as well, because I think that that will be— You will not have time to go into the evidence here today, but certainly if you feel that there is something additional that you could write into the committee to illustrate and add to that point, that would be helpful. I see that Angela was nodding in agreement. I do not know if Scott Milne has any comment on that that he can make at this stage. Again, my role is generally after—during a formal insolvency appointment or thereafter— I do not have the same involvement as those guys will have in terms of the creditor engagement potentially. What I am looking at is presenting creditors with, effectively, a packaged fate accompli, so there is less scope, I suspect, for me to have a great amount of input to that. We will move on to questions from Colin Beattie now. I would like to look at the breaches of trigger figures and the administrative impact on advisers. Various people have given evidence of comment on that and have been interested in maybe a little bit of explanation as to how that would impact on yourselves. I think that the first thing to remember is that a breach of trigger figures is not something that always has to be justified. The financial statement that David Hilferty made before is that it is not just a way that we get someone into a solution, it should be a budgeting tool. It should be something that stays with them and they work towards it. It is an on-going conversation between the adviser and the client. We will draw up an income and expenditure, and if we see that there is a breach in trigger figures, we then need to have a discussion with that person about why there is a breach. That is already made quite difficult because we cannot tell them how much they have breached by or what the figure is that they are aiming to get towards because we are not allowed to tell them the figure. Given the fact that most of the money advice process is built on trust, it is a very intrusive process, and we are asking them to give us a lot of details about their life and their household, that is very difficult. However, if it is something where there is not what we would consider to be a reasonable explanation in the view of the creditors or the AIB, we need to then work with that client to get that breach down. That is the first piece of administrative work that we might need to do. That could be comparison sites that could be assisting to complete discount forms. It could be doing a spending diary exercise with a client to try and get them to reduce what they are spending, advising them about cheaper places to buy food, and all that sort of stuff. If it is a reasonable breach, which would be generally the ones that we tend to see are where there is a disability in the house and someone has a particular dietary need, the other one would be where someone has joint care of a child but they do not have the allowance for the child in their budget because they do not have full care of that child. We then have to try and evidence one what is the breach and show that they definitely are overspending that breach but also to provide evidence for the cause of that breach. As I say, that is not always an easy discussion to have with someone who is already, potentially at their lowest point, and you are saying to them, no, you need to go and get me evidence that you spend that much on petrol. We need to write a reason about what your health conditions are and the reasons that you need to spend more than that or because they live rurally or because of the job that they have, whatever the reason might be. We need to have sufficient evidence for that and we need to explain to the client that that is not because of our mistrust, that is because later on down the line we are going to be asked to provide that. For what you are saying, that sounds like quite a lot of work potentially in each case. Do you have any quantification as to the cost of that and the notional cost? No, I could not give you a notional cost. It is not something done for, fortunately, it is not something local authorities measure. I do not know if the other guys have done any exercises. Another thing to mention is getting evidence for trigger figure breaches. If we adopt the standard financial statement, there is more evidence that we need to gather to evidence that the fixed costs under the common financial statement are just essential expenditure, which is usually fairly easy to evidence, such as rent, council tax, gas, electric, TV licence. Under the standard financial statement, it shifts more of those expenditure into those fixed costs, which will then need to evidence. That brings in travel costs, where before, as long as they were within the trigger figures amount, we could just accept them and just move on. It is not even just the breaches of the trigger figures that will need to get evidence. We need to get evidence for more things if we adopt the standard financial statement. At the moment, if we just write up to a creditor for just a voluntary payment plan, they accept that we have done the work, verified and they will accept the payment plan, but when we are looking at statutory options, we have to send evidence to show that that person is what we have put on the statement is correct. It is not just the breaches of the trigger figures. The difference between SFS and CFS administratively, right from the beginning, is more onerous. It is always difficult to quantify that, but is there any sort of percentage or cost that you can put around that, even in time? It would probably be time, because at the moment there are currently challenges for people gathering the evidence. People, as Nicola said, when they are coming to us, they are the lowest point being in debt. The fact that we then need to get them to gather more evidence to be able to get a solution can delay the process of them getting to that point where they can walk out the door and say, no, I've got something, I'm back into control of my finances. We're then looking at the standard financial statement where we have to gather even more evidence. That whole process is going to be prolonged to potentially maybe up to three or four weeks extra just for them to gather evidence. If you're looking at a monthly financial statement and you're wanting fuel costs for a month, you're going to have to gather evidence for a full month to be able to show, well, that's my actual cost. That's a huge difference. Coming in then, perhaps, to you, Arlan. Thank you. This is actually a subject that is probably more dear to the hearts of the insolventy profession. Trigger figures appear to work for what has clearly been defined as a standard individual. Sadly, we don't deal with standard individuals. We deal with self-employed individuals. We deal with individuals who are on zero contracts. We deal with individuals who are managing five part-time jobs at any given point in time. The common financial tool as it stands doesn't provide for that to work, the standard financial statement, even less so because of the matters that Nicolaus has just discussed. It's very inflexible. For 20 years, creditors as a group accepted what the insolventy profession was assessing as a reasonable amount of income and expenditure and therefore contribution. We've got a lot of experience of doing that. Those guys have a lot of experience of doing that. The tool restricts us. The standard financial statement would appear to be even more restrictive, simply because there are less categories, having to lump categories together. I can give you a cost in terms of time for just having to deal with trigger figure breaches. As an example, an individual came to seek insolventy advice from me a couple of weeks ago, three weeks ago now, with the view to his personal bankruptcy. Self-employed, worked, someone so on, someone so off, a designer. Two cars approximately two and a half weeks of touring and froing with the account in a bankruptcy's office to reach agreement on a zero contribution. We knew the minute that gentleman walked in the door that his income and expenditure was such that there was no prospect whatsoever of him being able to provide any contribution towards his debt. It took three weeks effectively, two and a half weeks, touring and froing with the account in a bankruptcy's office, making the applications, reaching trigger figures, trying to gather evidence from them, trying to read from bank statements. Once you get the evidence, you then have to explain the evidence. I've been asked for payslips from somebody who is self-employed. Self-employed people don't get payslips. Self-employed people generally issue invoises or on a self-billing basis. There seems to be a lack of understanding sometimes when dealing with the account in a bankruptcy over what evidence we are actually able to provide, but at no point are we asked to give our professional opinion and judgment over whether this is correct or not. I can certify an individual's insolvency by signing a bit of paper based on professional knowledge, years of experience and the evidence that's presented to me. I can make somebody bankrupt, but I can't, myself, suggest what the contribution should be. It is very restrictive to the insolvent profession. In terms of hours, breach of trigger figures, you can be 10 or 15 hours' worth of extra work prior to being able to process and fully proceed with the insolvency application. In the meantime, and from a human perspective, the individual who is suffering problems with debt, who has been often pursued, harassed, is perhaps too strong a word, but that's how they feel by creditors, is unable to get the resolution they want and they deserve because of the additional time and effort spent toing and froing with the account in a bankruptcy over ultimately what amounts to a fiver here or a tenor here. The other major concept or major issue that the insolvent profession faces is that it costs me more to administer £12.74 contribution every month than it does in benefit to the creditors. There's no de minimis. As it stands, the tools are such that whatever number is spat out at the bottom is the number that the contribution order is set at. I've worked for various firms, some in charging rates that this committee would find exorbitant, and I would have to agree with that quite frankly, but some charging much lower rates. Even at the lowest rate of an insolvency practitioner's general assistant in a practice to administer a £12.75 contribution payment on a monthly basis from the bankrupt individual, costs us more to do that. There is zero benefit to the creditors. At that point, where has it become viable financially to collect that payment? Realistically, around £50 a month mark, I would say. From my perspective as an insolvency practitioner in terms of the income that generates over a four-year period, how many orders are there that would be £50 or over in contrast to the ones that are below that? I can only speak for cases that I have a direct involvement with. We don't do a massive amount of personal bankruptcy. I would say that there's a disproportionate amount that I see below that £50 a month limit, if we want to call it that, that makes it economically viable in relation to the overall numbers that we're seeing. If I'm looking at 10 bankruptcies, I would suggest that more than half of those are looking at contribution amounts that are set following the use of the tools at less than £50. Jackie Baillie wants to come in at that point and then we'll come back to Colin Beattie. I've got quite a specific question and it's in relation to the accountant in bankruptcy letter about trigger breaches. I wonder whether I could put this to Mr Mackintosh first. It seems to be a degree of controversy over which financial statement results in the most trigger breaches. Let me just read this section to you that they've sent to us, owing to significant concerns raised by the money advice sector, the way in which SFS trigger figures were calculated was changed before the figures were uprated for 2018. On the basis of the 2018 trigger figures, for both the SFS and CFS, there is a clear fall in cases where trigger figures are breached. Is that correct? Do you know what changes they made and should be found on their analysis? From my understanding, what happened was that, in 2017, the SFS was introduced, comparisons were done, comparative studies were done with Moneyvice Scotland and a relatively small amount of cases. The accounting bank said that we did a comparative study with about 1,500 cases and the study was between the SFS 17 and CFS 17. I believe that that produced quite a number of breaches. What happened was that there was a lot of pressure put on, obviously, in relation to the money advice sector by David Hilferty, primarily, about the level of those breaches. What happened was that, in SFS 18, some of the figures were uprated by as much as 100 per cent. I believe that the way they did that was because the statistics that they used took out the universal credit claimants, the benefit claimants, and that raised the average and allowed the SFS 18 figures to go up. Unfortunately, they did not do that for the CFS 18, which is still the figure that we are using in Scotland. In actual fact, at the time of rising living costs, because of the people who are in that income group who are seeing their incomes drop in real terms and therefore the amount that they were spending dropped, their figures were downgraded. Unfortunately, although the governance groups for both tools are pretty much the same people, they did not see the fact to apply the same tweaking that they did for the SFS 18 to the CFS 18. When you make a comparison between the SFS 18 and CFS 18, it looks like there are less breaches because the SFS 18 has been better. However, if you were to make that comparison, I would argue with CFS 17 before it was downgraded, I do not know what the outcome would be, but I think that that would probably give you a better idea. Would you go so far as to say that there has been a degree of slight of hand here? I think that some people may take the view, and I am certainly sympathetic to the view that this may have been to trying to help nudge Scotland into the debt, except in the SFS 18. That is just my view, but I cannot say that for any of it. Do any of the other panel know different, or would you concur? I do not know any different. What I can tell you is that, as a result of this, we now have clients who, last year, did not reach any trigger figures and we could send out their offers, and now we are bringing them back in to review their circumstances, and their incomes have not changed, but we are having to tell them to spend less. We can see if SFS figures have gone down. Again, we cannot disclose how much they have to reduce their living standards by, because we are not allowed to tell them what the trigger figure is. We have just got to tell them that your creditors now expect you to spend less. I am not hearing much good about SFS from an administrative point of view. Would you judge between SFS and CFS, which is the fairest to both sides in that? I believe, potentially, a lot of those tools. My colleagues may disagree or disagree with me, but I believe that, potentially, they can all provide fair outcomes and they all can provide for both the creditors and the debtors. The key is in how they are applied. One of the questions that came up last week was, I believe, who are the easiest creditors to do away. I find consumer creditors, except maybe some of the high-risk lenders, relatively easy to deal with. The trust and the accept that we are reputable agencies, I am sure that it is the same for the citizens of various periods. I am sure that it is the same for the insolvency practitioners. If we tell them stuff to generally accept that we are following good practice, we are following the FCA's practice and exactly what we do, public sector creditors can be a wee bit more difficult, especially because they are in a position where they may be able to take recovered actions, so they can be a wee bit more difficult. The biggest problem that we have is not a creditor, but the biggest problem that we have is with the accounting bank. One of the reasons why it is so important that we have to work to the standard mode that sectors at every single case are asking what is the cost implications. If we do not get the figures right, if our clients put in an application for a minimum asset bank, which costs £90 per application fee, if we put in an application for a full administration bank, which costs £200, in which our clients struggle to get the money for, if the AIB accepts that application and then decides there is further verification required, our client gets a 21-day letter to produce that evidence, and if they do not produce that evidence, the application falls and they lose their money. That is why, for a reputational point of view and advice point of view, I am sure that my colleagues would agree, we need to make sure that we are doing double checking, but we are getting everything correct every single time because we cannot risk losing that money for these clients. It sometimes spend months saving for it, so we have to make sure that we are right every single time. I appreciate all that you say, but what I am looking for is a sort of judgment here based on your knowledge and experience of both systems, which is the fairest all-round. I think that there is a difference in the amounts, which is arguable because there are different methodologies, but I would say that in terms of principal positions, the CFS is fairer and I have quite a specific reason for that. In the CFS, we have another category, and generally what we capture in the other category is things that are lifestyle choices or things that are led by your household circumstances. You have things like vet bills if you have a pet, you have school meals or meals at work, you have kids' day out, pocket money, hobbies, leisure, all those sorts of things. If somebody exceeds that other category, we then have a conversation about what we need to have a discussion about choices here and what we can afford and what we can't afford. Those kind of things are quite easy to set off against each other, not always, but they are a bit easier. Some of those things are now moving into housekeeping, so we are now going to be turning around to people and saying, well, you might be can't afford the vet bills or you might be can't afford the food. We are going to have to make a decision here. That is not really a route that I would want to go down with my clients. I do not think that it follows a natural budgeting process. There is a natural idea that you have your housekeeping expenditure, your travel expenditure, phone connectivity and then everything else is more choice-based. We can then have a discussion about what you can afford within that. As you say, that has been taken away in the SFS. Personally, I think that it will make it harder to have those budget and discussions because you will be asking people to make much more difficult choices. Does anyone else have a view on that? I would certainly agree with that. If pushed, I would say that neither but are particularly friendly and helpful, certainly from my profession's perspective. However, I think that there is a greater degree of inflexibility in the standards financial statement, which would undoubtedly make it harder. I just want something that gives people a decent, reasonable living cost. Whether that be, I have been using the common financial statement since I began my advice back in 2004. There has never been a big issue with it at all, but what I am now seeing is the more onerous kind of administration to implement the Scottish financial statement, the impact that it might have on clients. The inflexibility is said by the other panel members that we need something that gives people a reasonable standard of life that they can mean that they can pay their debts back. That is what I want to see in whatever tool that we use. If we are going to take on board the standard financial statement, my understanding from the evidence this morning is that there are less categories and those categories have different expenditure limits. Given that costs tend to be different in Scotland in terms of housing costs, heating costs or whatever they happen to be, what is going to be the impact on the individual, the debtor, if we move over to the standard financial statement and put aside to one thing that Jackie Baillie raised regarding whether we are comparing life with life in terms of the two systems? What would the impact be on the ordinary individual? You are talking about the heating and housing costs that would come under the fixed category, so there are not limits on those. They would not be particularly impacted by that. Similarly, we have a lot of rural populations and petrol has moved, so the things that are left over are things like food, phone and broadband. I guess that the big one that I could think would be an issue is for rural communities. The cost of broadband could be an issue. However, if they are breaching trigger figures, it is up to the person who receives that to take our justification for why they are breaching that trigger figure and understand it. I would hope that if we were dealing with accounting bankruptcy and there was extra cost, because they are based in Scotland, they would understand them. However, as they say, we would still have to provide evidence whenever there is a breach. It is hard to say, because it is dependent on every single case, so to make generalisations is difficult. However, I think that it was recognised by the Scottish Government when they brought forward their recent changes to the debt arrangement scheme that was passed for this committee in September. They have now made provisions, and it came in 29 October, where debtors who are now in the debt arrangement scheme do not need to give their full disposable income over to the creditors. That is a recognition of the restricted nature of living on those budgets over any period of time. They felt that, in relation to the debt arrangement scheme, people should not be restricted like that. I understand why I supported that. However, I have to bear in mind that there are debtors who are in bankruptcies and debtors in trustees who do not have the ability to offer everything, so they will still continue to live with those restricted budgets. If they become tighter going forward, then it will make it harder. There are more chances of default, more chances of people missing payments, which I am sure has consequences for insolvency practitioners. It has problems for money advisers. If trustees fail, a sequestration can never really fail, but if a trustee fails, the clients get their debt back and then they come back to us. We spend a lot of time dealing with us where people have been in a solution that does not work. If they fail, they come back to us. We need to start for scratch again. It means that clients did not get their debts resolved within the four years. It is going to take six years or eight years. I think that it is not going to be a good thing if it is going to put people on a more restricted budget. Does either system, whether it is the common financial statement or the standard financial statement, either provide a reasonable standard of living for the person who is trying to make those repayments? Subjective, because it depends on what you consider to be a reasonable standard of living. I do not think that the majority—we sometimes have clients who live in poverty, but that is not because of these common financial statements. It is because they may have very low incomes. The majority of the clients that we see in Inverclyde are the majority of the clients that my money advisers see in Inverclyde. Breaching the trigger figures is not really the big issue. It is a bit verification because the majority of my clients have never even gotten near the trigger figures because they are on universal credit, etc. Whether people—it depends on what you have as a reasonable standard—the living that I put in my submission is one definition of it. I will not read it out because it takes quite a long time, but I generally think that a reasonable standard of living is to be able to go to work, live in a warm house, to have various different types of clothing. You sometimes go to my kids' schools and you see children wearing totally inappropriate clothing for the winter, and you can obviously see that as the effect of low incomes. Those are the things that I would associate being able to have some social time going out and having a meal. It really depends on what your views are of what constitutes a reasonable standard of living, but I would hope that we have moved on through the Victorian times. Those are the sort of things that I would see as a reasonable standard of living. Whether those allow this, I think that it really depends on a case-to-case basis, but they have the potential not to allow it in some cases. I guess that I would say no. I would say no for a couple of reasons. For one reason, that is not what those tools are based on. Those tools are based to make sure that you have a lifestyle that is based on the average standard of living of those in the lowest incomes. We do not even start out from trying to give people a reasonable standard of living, so we are not measuring that because that is not what the tools are devised to do. However, there are two reasons that I think that they definitely do not. One is that there is a lot of credit given to the CFT for bringing in a savings provision, which we did not have before. However, that savings provision is 10 per cent of your disposable income to a maximum of £20, so you only get £20 a month to put away if you already have a disposable income of £200. If you have less than £100 a month, you are getting less than a tenor a month to save, that is nothing. To be honest, it is very unlikely that clients will be saving that. If there is an unexpected school trip, if the washing machine breaks down, they do not have the money to deal with those things. For me, that is not an adequate standard of living if we are not allowing people enough money to be able to deal with an emergency or just an extra birthday or anything like that. The other thing is that the Scottish Government's work on child poverty, you already talk about material deprivation. You already talk about the need to be able to have a tenor a week, but we do not allow that in the financial tool. We do not turn around and say that the adult must have something to spend on themselves every week. The measures that you are already discussing in terms of poverty, those tools would fail on for me. What changes should we be making to the system in order to reflect the things that you have just suggested? If you want a tool that gives people a reasonable standard of living, that is what you have to start out from. What is a reasonable standard of living? What do we give people? What is left over goes towards their death. If that is not what you want, it is people to live on the average standard of someone on a lower income. Those are the tools to go ahead with. However, you cannot retrofit those tools to become something that is going to give you an average standard of living or a reasonable standard of living, because that is not what they are designed to do. In that respect, that is absolutely correct. Where we see a huge skew is that, in terms of standard of living, if you are quite a wealthy individual with a large house and a huge mortgage, that is okay. I have bankrupts who are paying thousands of pounds a month on a mortgage. They can choose not to have to do that if they see fit, but because the mortgage cost does not have any trigger figure or bearing on the rest of it, that is okay. It is quite all right. To some degree, the current system favours the more well-off, not with standing that they would perhaps expect a higher general standard of living with their expenses, but if they choose to channel a huge amount of their income into housing costs, into an expensive mortgage or very expensive rent, they are not penalised for that. If I am looking at it from a creditor perspective, because fundamentally, once I am appointed, my clients are the creditors, my job is to get money back for the creditors, while still obviously having a duty of care to the insolvent individual's financial wellbeing, often mental wellbeing, but that is something that we all have to deal with. From my creditor perspective, I generally do not see a standard of living problem, and often I am looking at having calculated a more hostile bankruptcy appointment, where the debtor is clearly clever enough to beat the system. That is a scenario in which we have no scope for any adjustments or to attack that potentially. There is nothing more distressing for a creditor who has owed thousands and thousands of pounds than seeing the bankrupt living in a £5 million house or a £1 million house, still driving the nice car, which is in a higher purchase, which is in a necessary expenditure to get to and from whatever self-employed or trust-employed job they may have. There is a great disparity between the less well-off in society and those who are somehow able to beat the system or those who have been declared bankrupt or who wish to declare themselves bankrupt but who have come from a much greater position of wealth to begin with. There is no option box in the tool. For me, what would help to fix that is you run through the common financial tool, you stick in all the information, and there should be a discretionary box for those of us with the expertise to be able to make that judgment call, not the accounting of bankruptcy. If we have to use the tools—and I am still going to say that we would rather not—our profession would rather see an assessed amount of fair living standards, which takes you back to, obviously, Nicolaus Cymru, of what is the fair living standard. We, as a profession, certainly in Scotland, would prefer to see total living income deduct a fixed amount depending on circumstances for general living expenses and then apply a percentage to whatever is left, consistency across the board, but taking account of the individual circumstances of each and every debtor rather than applying a one fix to all potential problems. However, we do not have that option box, we do not have that discretionary box, we do not have that £10 or £20 a week savings box, we do not have that if something goes wrong, because things go wrong all the time. Sometimes your fridge blows up for no reason. It has happened to me the other day. You cannot just pigeonhole everything into a set of numbers and tools, and one size does not fit all. That addresses a lot of the issues that you have raised about those that are better off being able to avoid the system and not make the payments that you should be making. If we move away from the common financial tool as it is, yes, absolutely. If the debtor wants to stay in the house that costs them £3,000 a month for their mortgage or rent, then they will have to figure out a way to do that that is not going to be a cost to the creditors, whereas currently it is. I suppose that, on that last point, if you had a discretionary box where you could just decide, who would the creditor a better than have a right to appeal to? Against your decision, if you are going to exercise a discretion around that? On that basis, you would apply the same rules that creditors have a right to appeal against trustee's remuneration, or any action of the trustee creditors have the ability to insist that the trustee convenes a meeting of creditors, that they can be represented at that meeting, that they can seek to be elected as a commissioner in place of the accountant in bankruptcy to assume a greater control and have a greater understanding of the process on a more daily basis, that there is nothing to stop regulations being introduced to give creditors the opportunity to object to that, that those objection processes are in place as it stands. I suppose that what I am saying is that the accountant in bankruptcy is the right person to make that judgment call and what's right and what's wrong and those circumstances. Right, just to move on to another question. If one assumes that the SFS were to be brought in, would you have concern about how that would develop as it progresses? I think that Alan accepted that there would be some benefits in having a UK-wide system. Is there any concern or do you think that it would be helpful to have a UK-wide system in terms of how that develops going forward, rather than a separate Scottish system, a CFS system? Obviously, I have raised my concerns. I have acknowledged that there could be benefits to the UK system. I don't think that it needs to be, but I have raised my concerns. I think that there is an issue of accountability here. I think that there is an issue of transparency about the public visibility of those figures. I also think that what happens is that, if those regulations were passed, I believe that they are currently working on their review of the CFS figures. Even if we were to discuss the figures, which obviously we cannot do publicly, but even if we were to discuss the figures that are currently applied just now, the reality is that they are not going to be the figures that are introduced on April 2019, because there is currently a review going on. One of my concerns is that, if we had a similar situation to what we had with the CFS 18, where the figures go down, which seems to be nonsensical but is completely logical, if you look at the methodology that has been used to calculate those figures, there is no real accountability to that. It is just a case that we need to accept them. To give another example, I believe that the accounting bank and ups are planning to lay figures in front of the committee in new regulations in relation to the bank harassment and the airman's harassment amounts, because they are upgraded every three years, but they have to come in front of the committee. That committee does have to get to them and look at them. If that committee passes those regulations, we pretty much have to accept that what those governance bodies are, how they calculate those figures, we use that methodology, whether they choose to tweak them or not tweak them. Maybe they have to accept them as a sector that they are not going to come back in front of the committee. There is not going to be any scrutiny of them. That is a concern to me, because, obviously, I think that this is something within the Parliament's authority. My personal view is that I value that. I do believe that the Parliament should be scrutinising those figures. If we sign off on those figures, then this can change. Like it did with the CFS 18, where it just goes down, and as Nicollas raised the concerns that the problems that is created for some hard clients, and it never came back to this committee, and elected members never got to see the figures. You were not aware that it happened, because we cannot share the figures. That is my general concern. I suppose that my question is directed specifically to if we have a UK-wide system, as opposed to a separate Scottish system in terms of the CFS, is that going to make any difference in terms of input into how the systems run or the ability to influence it? I think that your point is that this Parliament should be in a position to scrutinise, as it were, as the committee is doing with those draft regulations. Is that a concern? That would not be the case if we went to this UK-wide SFS system. I believe that that is my concern that we would look effectively unless the regulations were brought back in. The reason they are brought in at the moment is only because the CFS has been discontinued in April, and that is why they are here. If they pass, they will not be back for quite a considerable time, but maybe some of my other colleagues might add to that point. I think that Scotland is a bit different. We are all sitting here in the first place, and it would be to me a total loss of control. As a local authority, we always participate quite a lot in consultations that come out from the AIB about Scottish legislation. Obviously, it impacts on us quite a lot. The concern for us if we go to SFS is that the Scottish voices will be diluted, and we have consequentials from the decisions that are made about the SFS on the CFT, and how the AIB will then go and administer that for statutory solutions. When it is only Scottish advice agencies that are talking about that, we are pretty much united with one voice. It is not of concern to our colleagues in England and Wales, because they do not have the same products and processes, so my concern would be that voices might not matter as much in those discussions and we might not find that we can influence it as heavily. The counter to that is the suggestion that moving to a UK-wide system means that creditors would be operating the same rules and principles to things and be able to understand what is happening in Scotland. Do you see that as a counterargument at all? Not really, as I say, we never have an issue using the CFS, and the regulations for creditors tells them to use the CFS, not the SFS at this point. I think that far too much importance is placed or far too much concern has been given to the concerns of creditors. Creditors do not care, genuinely. In terms of what system is used, they just need to know that it is coming from somebody who is a regulated or authorised person to sell them. The suggestion in fairness to the paraphrase that I was using was that debtors would benefit because creditors would know where they are at as well as debtors. I suspect that debtors do not care as long as they are being treated fairly and have a proper system that they can rely upon in the same sense. A brief follow-up from Willie Coffey before we come to Andy Wightman. Thanks very much, convener. Somebody new to this committee and this subject is absolutely fascinating to read and listen to your contributions, given with such passion, I should say, too. I just wanted to ask Alan, where does the accountability trail end up then, if it is not here? You mentioned in the tail end of your paper that if Scotland adopts this and it produces these unexpected results, we just cannot turn it off. Does that mean that we are stuck with it? If I can give you an example to that, I believe that what happened is paper and paper is a private company, but it is a free provider of debt solutions for the whole of the UK. It is one of the largest providers of debt solutions for the whole of the UK. When the SFSA 17 was brought in in April 2017, what actually happened is that it adopted it. I believe the child for a few months, and my understanding is that it stopped using it because it failed to produce over-generous results in favour of debtor. I then believed that it stopped using it for almost over a year. We are not going to be able to do that once the regulations are passed. We do not get to go cancel. We have got them, whether we like them or not, whether it works or not. Down in England and Wales, Northern Ireland, they have the option because it is voluntary that they can turn it off and say that we are actually not using this at the moment until we get systems fixed or we do more training for our staff. We do not get that option. My big concern is that, once this is passed, rather than that Scotland is going to join the rest of the UK in using these figures, that is what is happening. Scotland is being used as the one that is going to push them into the rest of the UK because they will be accepted and used uniformly across the whole of Scotland if the regulations are passed. That has not actually happened. I think that they have been widely used across the UK, but they have not been uniformly adopted in Scotland if we turn this into legislation that they become basically uniformly. I have concerns about accountability because, for example, I believe that the gentleman for the money advice service last week spoke about the comparative studies that were done with the Joseph Rowntree minimum income figures and that they were not as bad, etc. I was on the common financial tool working group. I have never seen that report because it does not get circulated. People will say that Money Advice Scotland sits on that committee, sits on the advice Scotland committee, sits on that Government's body, accounting bank nobs sits on that Government's body, Scotland has been represented on that body. I sat on the Money Advice Scotland Management Committee, as Nicola said. I sat on the Money Advice Scotland social policy committee. I did not see that report. I did not see it as a member of the common financial working group. I did not see it as part of the Money Advice Scotland social policy committee. I also requested that the common financial tool working group study be done into the public visibility and the trigger figures. That was commissioned months and months went by. Eventually, I asked them what happened to that report. They said to me that it was done. I said, can we not see it? They basically said that it has only been shared within the Government in the scope of their CFS. Again, as a common financial tool working group member, I did not get to see it. As a Money Advice Scotland committee member and the social policy committee member, I did not get to see it. Although Scotland has been represented, there are certain organisations. I believe that those organisations are being restricted in terms of how they can circulate information to us. What sort of voice do we all have? We will move to Andy Wightman. Thanks very much, convener. There are just a few points. It is true that the vast majority of debtors do not enter into statutory solutions that they reach. Can you quantify that, roughly? I cannot off the top of my head. I can come back to the committee. I can run a report on what percentage are in statutory solutions over the last year. I can come back to the committee with that. That might be quite helpful. Thanks very much. Alan, I think that you were talking about earlier that there is no role for Parliament in scrutiny of the actual figures. There is not now when there never has been. I just wanted to clarify that nothing is changing in that regard. You were indicating that you would like that to be the case. Would that actually be possible within the current legislative regime? I do not believe that it would be, because it depends. I believe that the problem is that to access the figures, you need to have a licence agreement. For example, I have not got a licence agreement. My employer and the Plaid Council have a licence agreement with the Money Advice Trust and the Money Advice Service in relation to the common financial statement. It is part of that licence agreement that we cannot public disclose those figures to clients or anybody else. We cannot put them on our website. If I do not know, but I have obviously this Parliament and I wanted to see them, I guess I would need to be given to this Parliament in confidentiality. On a confidential basis, otherwise, if they went on your website, I would take it and then become public information. I have questions about how much can you scrutinise those figures. It is quite clear that if we cannot share them, we cannot allow them to get into the public arena, because otherwise, we would not breach of our licence agreements. Another question. You say that the common financial statement is proposed, but it will not be used beyond April next year. The regulations intend to replace it. However, there is a question regarding the administration and the updating in the governance of both the common financial statement and the standard financial statement. If those regulations are not passed, what happens to the common financial statement through 2019-20? We will need to resolve that problem, because obviously they will need to be upgraded. The information that the raw data that is used to create them is obviously public available. I do not know if someone could be… There is a Scottish Government department, I believe, in the last meeting, where people were saying that, in certain sections of the Scottish Government, it could take on that role, whether it is something that you would pass to, or maybe an academic organisation or university department to do. Obviously, somebody would have to take on the responsibility of upgrading those figures and possibly tweaking them, because obviously somebody will have to do that, otherwise, we are going to have figures that are basically frozen in time and the cost of living is going to continue to increase. But, if you did contract that to a university or a Government that did it in-house, then there would still have to be the same licensing regime around using them potentially? No, because then it would be our licence effectively, because we would just be caught on something else and it would be us that would issue those figures and the Scottish Government would be able to give those figures. I mean, I was probably being a bit devilish, but I did actually put a freedom of information request into the accounting and bank drops when the entry system in 2017 says, can I get the common financial statement trigger tickles? I already had them, but I just wanted to see if they were given them through the freedom of information request. They refused on the basis that they were bound with the licence agreements. I suppose if the Scottish Government takes on that role, they would have to disclose them on the freedom of information rules. Okay, so that moves on to a substantive point. I mean, Nicola, you were talking earlier about the importance of trust in the system with your clients. I mean, and the licence at the moment means that these cannot be shared and, as I understand it, the argument for that is to provide some comfort to creditors that debtors can't game the system by putting the argument that it's made for that. Do you think that these figures should be made public? Oh, I would say definitely yes. I don't understand it myself. I work in an integrated advice team. We do a lot of different types of advice. My colleagues that work in welfare rights can sit down with a client with a disability and show them the scoring system for PIP. They don't have to worry that that client is going to turn round and say, oh, I've got that, I've got that, I've got that, and try and game the system. My clients are working housing. They can explain the allocations policy, how points are awarded. Again, they don't worry about that client pretending and gaming the system, so I don't understand why they have this deep mistrust of people that are in debt. Most of the people that come to see us are not reckless, they're not reckless, they've not got into debt because they've badly behaved or been dishonest. Something has happened in their life, they've become ill, they've had a relationship breakdown, they've lost their job, they were living within their means, they were doing everything right and they thought they could manage their debt and something happened they didn't expect. Because of that, I've got to go on this level of mistrust, which doesn't feel right, as I say. Again, when we're having that conversation, I don't think that my colleagues and other advice sectors understand the level of information that we're taking from people. We're asking them for the bank details, we're asking them for all the details of health of everybody in that house, we're asking them about their background and what happened to them, we're asking them to explain how they go about their lives, how do you pay your bills, what do you spend it on. Give me your bank statement so I can go through it and itemise everything. That's not a comfortable position to be in and we have to do a lot of work to build that trust and to release the shame from the person because the other thing that many advice clients have and common when they come in, is they blame themselves, regardless of the fact that, as I say, for most people it's been a change of circumstances or just living on a very, very low income where you don't have enough money to get your essentials. They come in blaming themselves quite commonly, I'm sure my colleagues will tell you they miss the first appointment, they miss the second appointment, they miss the third appointment because their bottle goes. And most people would say, well, we're going to stop dealing with you because you've abused the terms of the system, we tend not to do that because we understand that debt clients need a couple of times to come back to you. And the same goes when it comes to the evidence gathering, these people a lot of the time aren't open in their mail. And then we've got to say to them, right, here's a big list of things you've got to get up within 21 days or it's going to cost you 90 quid, 200 quid. But as I say, in terms of the releasing the figures, I think it's a shocking way to treat people who have done nothing wrong, they've done everything right. We don't tell people not to take on credit, we tell people credit's a good thing, but as soon as they struggle to pay it, we stop trusting them, is the way that it seems. Okay, thanks, that's very helpful. I mean, coming out of the evidence last week was a suggestion that the existing system, common financial statement, needs some review, the current system needs review. In fact, Scott, you were advocating a very different system, and I think that was also advocated, as I recall, from the Institute of Chartered Accountants. I think that we're saying that as well. I mean, instead of changing the basis in which we assess people's ability to pay off their debts, should we be undertaking a rather more fundamental review about how that works and how that's done before we get to which tool we should be using? Is there some value in that, or do we not really need to do that? I would say that there's a lot of value in that, and I would say that one of the biggest pieces that's missing is nobody speaking to the debtors about what it's like to live within these trigger figures. We sign them off, we send them away, even for ourselves. We see them every six months. If they're in an informal payment arrangement, we would bring them in every six months, see how things are going, make sure they're managing things okay, see if there's any other support that they need, and confirm to the creditors whether their circumstances have changed or not. That's a duty on us because of the creditors. That discussion is half an hour. It's not research, it's anecdotal. I think to know how people are actually managing and whether people are sticking to this, because, again, I think that my colleagues will probably agree that we all have clients who, with the best will in the world, go out to stick to these figures with a plan, and the next time we see them, they've had to take out another loan, they've had to do that, they've had to do that, they've missed payments, rather than us just taking an approach that says, right, how do we fix this? I think that if somebody was actually looking at why that's happening and whether there's an issue of sustainability within the system and getting the debtor's perspective is key, I think, on that. Can I just add? Fundamentally, from our profession, we believe that a different solution or a different method of calculation for a statutory debt solution would be viable to an informal debt solution. In an informal debt solution, the individual debtors are doing the best to pay off their creditors. In a statutory debt solution, if you exclude a DAS from that debt arrangement scheme, it's a— If you exclude what? If you exclude a DAS debt arrangement scheme. Oh, right, sorry. Yeah, which provides for effectively repayment in full of the debt over a period of time. If you're looking at the other statutory solutions that are trusted with bankruptcy in Scotland, that's a debt forgiveness tool. The creditors are not going to get £100 in the pound, so the calculation that you're doing is for a different purpose, effectively. We believe, and certainly I believe personally, that my profession, from those I've spoken to, believe that there is absolute scope for a different system. I find it very bizarre that trigger figures cannot be discussed. I'm not party to any agency agreement or licence agreement to use the tools. I'm an insolvency practitioner. I have to use the tools. The statute requires that I do that. So I'm not signed up to using them. I just have no choice but to use them effectively. Dr upjunt, on that, does that mean that if you haven't signed a licence, does that mean that you're not bound by the confidentiality agreement? We adhere to it. We don't tell debtors what the trigger figures are. In law, you're free to, if you wish to. I couldn't answer that question now because I haven't given it the consideration to see if I have. I have adopted, as far as I'm aware, a similar approach to all the pre-saturatory insolvency regime advice centres and different agencies that deal with that. It doesn't take much for a debtor to work out what the trigger figures are. I spend £500 a week on shopping. You can't, sorry, it's too much. How about £350 then? Yep, that works. It's not difficult for somebody with a little bit of intelligence to be able to calculate in their own head what the trigger figures are. We don't sit down with a debtor and say, right, I want all your receipts, I want your shopping bills, I want all of this. We sit down and say, what do you spend? If I'm appointed on a court appointment by a creditor, I send a document to the debtor while I also say, please come and see me. It says, fill out this income and expenditure form. We then plug that into the common financial tool. If it breaches trigger figures, we have to disallow certain expenditures. We're looking at, in those circumstances, obtaining the evidence after the event, not prior to the event. A debtor says to me, I spend £500 a month on shopping, plug the numbers in, it either accepts it or it doesn't. It doesn't take a huge amount for someone to work out what the trigger figures are and what they are within a very close range. I understand that there is a concern that creditors would be worried that our professions are working with debtors to try to pay them the minimum amount or nothing at all. As I've said, in a statutory debt process, creditors have rights to challenge all of that. They have rights to question us, they have rights to be heard. We are presenting them with a scenario and, as I say, more often than not, they accept that. I don't believe that there's a need for... Back to this one tool, it certainly does not fit all scenarios. You're being asked to use the same tool for somebody who, as you've said, maybe has a marriage breakdown, runs into financial difficulty, wants to avoid a bankruptcy, doesn't want to get involved in a trusted, doesn't want to be tied to a debt arrangement scheme for x amount of years, just wants to sort their problems out. That's a very, very different animal to somebody who is made bankrupt by HMRC for not picking their taxis, or somebody who comes to me and says, Scott, I really can't deal with this. My business has gone bust, I've got huge personal guarantee to a bank, please help me, help me deal with this. Those are completely different animals, they're opposite ends of the spectrum, but yet we're all supposed to use the same process to decide what the outcome is. Okay, thanks. Can I steal them from Alan and be a bit devilish? I guess the concern about creditors that will max out trigger figures, I can understand them, maybe with the other category as I see it, it's a bit lifestyle changes and things, but if that is based on the lowest quintile incomes and average standard 11, why are we so worried that people are going to adhere to that level of standard 11? Why do we want to make sure that they don't possibly get there? I have a bit of an issue with that as well. I've never seen a money adviser go about their business by saying, that's what you put there because I've worked it out, that's what you'll get to spend. As I say, there would be no point, because we can't then do the budgeting work that's so key to what we do and it's not going to be sustainable. But if people are at those limits, they're not having a luxurious life. We've already established that. Why are creditors going to be so worried about it, I guess, is my concern. We're now coming up for running out of time. In fact, we've run over our intended time. I'm just wondering if all of you think there should be a review, perhaps if you could write into the committee and indicate what areas such a review could cover and perhaps set out your specific comments on how a better system would operate, because I think that it's probably commonly accepted that it's easy to criticise, but often it's more difficult to see how to actually build something better. If you have thoughts like that that you'd like to submit to the committee, then we would welcome those. Andy Wightman. A brief follow-up would be useful if you did that quite quickly, because we're taking evidence from the minister next week. That's very helpful, thank you. You may not be able to write a 200-page thesis, but if you did have thoughts that you could provide to us quickly, that could potentially be very useful to the committee. Thank you very much for coming in today. I'll now suspend the session and move into private session.