Changes to Trust Deed legislation

On the 28th of November 2013, the Scottish parliament enforced new changes to the Protected Scottish Trust Deed. These changes were intended to improve transparency throughout the process and address disappointing returns to creditors. These changes will not affect many reputable Insolvency firms and the associated partners who only recommend a Protected Trust Deed if it is genuinely the best option for debtors. However, it will hit companies who have been offering Trust Deeds when the criteria was not appropriate for that solution.

The changes that have been rolled out include the following;

  • As part of the process of administering a Trust Deed, creditors must now be notified of the Trustee’s fees before they are asked to agree to it.
  • Guarantee a minimum debt level of £5000.
  • Make a Trust Deed unfit as a debt solution if the debtor can repay their debt in full within a 48 month period.
  • Trustees can now only charge a fixed upfront fee rather than charging hourly.
  • Exclude pre trust deed fees such as a fact find.
  • No contributions from their social security benefits.

These regulations were implemented to address mounting concerns over the levels of fees that Trustees were charging, the size of the dividends and amount that was truly going back to creditors.

Also, the quality and level of advice that debtors were getting before entering into a Trust Deed. These changes will benefit creditors and debtors but has probably upset a few unscrupulous insolvency practitioners.