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AiB achieves full cost recovery PDF Print E-mail
Thursday, 17 September 2015

The annual report for Accountant in Bankruptcy (AiB) shows it has achieved its target of recovering its operating costs through full cost recovery for the second year in a row.

The 2014-15 report provides a record of the Scottish Government agency’s business performance and activities as well as a detailed analysis of figures compiled at AiB, including insolvency numbers for the financial year.

The Agency received another clean, unqualified report from Audit Scotland on the reliability of its annual accounts.

AiB recovered all of its operating costs through administration of its statutory debt solutions, effectively eliminating the draw on the public purse.

Business Minister Fergus Ewing said: "As the Minister who has had the responsibility for the oversight of Accountant in Bankruptcy over the past nine years, I am very pleased to see the hard work of AiB staff to administer personal insolvency in Scotland has achieved such positive results.

“The achievement of full cost recovery is a great success story. This is in contrast to the situation in 2007-08 when administering personal insolvency in Scotland required funding from the public purse of over £6 million. This means taxpayers funds can today be used in other Scottish Government priority areas.

“The Bankruptcy and Debt Advice (Scotland) Act 2014 which came into force this year introduced measures for financial education to help all citizens develop their financial capability skills and maximise their income.

“In addition, the success of the Debt Arrangement Scheme is acknowledged throughout the UK and this is a tribute to the good work of the team in AiB.

“This report demonstrates AiB gets on with its work quietly and effectively and is a modern day success story."

Total personal insolvencies, which include bankruptcies and protected trust deeds, awarded during the year fell sharply by 19 per cent to 11,167, down from 13,793 for 2013-14.

However, despite numbers falling for bankruptcies awarded, funds returned to creditors continue to rise through protected trust deeds and debt payment programmes approved through the Debt Arrangement Scheme.

£36.8 million was returned to creditors through the Debt Arrangement Scheme (DAS) with 896 DAS cases concluded, 73 per cent more than during 2013-14. In addition, £27.6 million was paid to creditors upon conclusion of protected trust deed cases.

The target of full cost recovery was achieved despite the past 12 months featuring some of the most significant change in AiB’s history.

2014-15 saw AiB spearhead the implementation of the Bankruptcy and Debt Advice (Scotland) Act, which introduced a suite of new regulations including a new route into bankruptcy for those with minimal assets and measures to promote financial capability.

New protections for creditors were also introduced in the legislation. Trustees may now defer a debtor’s discharge indefinitely, until they are satisfied the debtor has cooperated fully. Bankruptcy Restrictions Orders may also now be made by AiB for periods of between two and five years should there be evidence of misconduct before or during a debtor’s bankruptcy.

Since the year outlined in the 2014-15 annual report, the Agency also appointed a new chief executive, with Dr Richard Dennis taking over at the helm of AiB upon the retirement of Rosemary Winter-Scott in May.

Dr Dennis said: “It has been an very busy but an extremely successful year for the Agency, which is reflected in this report.

"We have been able to recover our total operating costs from service users, thereby eliminating the requirement for public funding for the second year, which in an era of tightening public sector spending is an achievement we’re very proud of.

“Despite a decrease in applications across all formal debt relief and debt management products, it is positive to see the amount repaid to creditors continues to increase year-on-year.

“The £36.8 million paid through the Debt Arrangement Scheme and the protected trust deed average dividend increasing to 21.7 pence in the pound demonstrate the interests of creditors and businesses are balanced with the needs of the debtor in every case.

"This report highlights the hard work of AiB staff – past and present – throughout the year, and demonstrates how the strong direction from our board and the positive relationships fostered with our stakeholders in the industry have played their parts in delivering the strong performance central to these positive outcomes.”

David Menzies, director of insolvency with chartered accountancy trade body ICAS  said: “ICAS welcomes the progress made by the Accountant in Bankruptcy and the Scottish Government in implementing the bankruptcy changes brought about under the Bankruptcy and Debt Advice (Scotland) Act 2014.

“Insolvency practitioners have played an important part in the delivery of those changes and ensuring the right of debtors’ relief from debt is balanced with maximising the return for their creditors.

“We look forward to continuing to work alongside the Accountant in Bankruptcy and the Scottish Government to deliver an effective financial health service for the people of Scotland.”

(Source - AiB Press Release)

 
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