Saturday, 3 December 2016

Thousands of consumers in Scotland go bust despite "protection" - GLC's Personal Insolvency Law Unit report

Many consumers in Scotland enter into personal insolvency solutions believing that they will resolve their financial difficulties and secure much needed light at the end of a dark tunnel of unmanageable debt.

The aim is to take back control, repay debts as best as possible, and provide financial rehabilitation and a fresh start for those who have generally been through life crises. In many cases insolvency solutions work reasonably well, but there are far too many cases where things go horribly wrong. In our experience, both consumers and creditors lose out.

Govan Law Centre (GLC) was concerned with the high incidence of poor outcomes for extremely vulnerable consumers, which is why we appointed Alan McIntosh to head up the first ever pilot Personal Insolvency Law Unit in Scotland. The project has so far been self-funded by GLC on a pilot basis in order to properly assess the scope, and need, for a dedicated and free specialist service in Scotland.

Our Personal Insolvency Law Unit Unit has been ingathering evidence from casework in Scotland since the summer, and today we publish our interim findings. You can download our report here (opens as PDF).  We provide evidence of widespread mis-selling of protected trust deeds across Scotland. A failure of regulation in Scotland's personal insolvency market which is costing Scottish consumers millions of pounds for virtually no real service.

Our report, written by the Unit’s Project Manager, provides compelling evidence that there is an overwhelming need for a dedicated free specialist service; a service that can provide both second tier support to front line advice agencies but also undertake complex and contentious casework for consumers.  Our report evidences a number of important market and systemic failures, including a high level of failed protected trust deeds and the failure to protect a consumer’s home from repossession. 

We agree with today's editorial in The Herald. The Scottish Government needs to reconsider protection for debtor's homes, and review the licensing and regulatory framework for those who sell trust deeds in Scotland. This is a devolved matter.
protected trust deed failure rate of 9 out of 10 must send alarm bells ringing to members of the Scottish Government and Scottish Parliament. As The Herald says, the evidence is "disturbing". Behind the statistics are human tragedies. Insolvency can and does happen to anyone.  The prospect of paying thousands of pounds for a service that all to often is doing nothing to help either consumer or creditors in Scotland is unacceptable.

Read further coverage of this story in The Herald here.


Wednesday, 30 November 2016

Celebrating #BIGScotland funding: GLC's Private Rented Tenants Project

Govan Law Centre (GLC) is delighted that the Big Lottery Fund Investing in Communities Programme is providing a grant over three years to establish our Private Rented Tenants Project, providing vital work on behalf of tenants throughout Glasgow.

The project is made up of dedicated solicitors, housing caseworker/coordinator, financial inclusion and capability caseworkers and a welfare rights worker.  At a time of forthcoming legislative changes and considerable increase in private renting use in Scotland, our project is providing valuable support to individuals and families faced with challenging situations.  

We have developed our service by setting up city-wide ‘Rights Hubs’ as well as a dedicated email box to ensure easy and accessible routes to help for tenants all over Glasgow who are experiencing difficulty with their private tenancy, landlord or letting agency putting them at risk of homelessness.

Tenants who would normally feel powerless, ignored or in a hopeless position are seeking our specialist help to have their voices heard and find long term solutions to their housing situation. Here is one example:   

GLC solicitor and caseworker with a client
Craig’s financial problems meant that his landlord was taking action to evict him.  Our project was able to advocate for him with his landlord and maximise his benefits income to sustain him in the property.   Craig says “I feel that I am really getting the help I need now.   I would normally rely on family to help, but they could not help with this.   I feel my stress levels have gone down and I am getting more money now due to my disabilities. I really appreciate having this support". 

We are continuing to develop and expand our service to ensure more tenants can benefit from our help and learn some key skills for gaining financial stability.

GLC's Principal Solicitor Mike Dailly said: "The grant from the Big Lottery Fund Investing in Communities Programme provides Govan Law Centre with the vital resources to set up our city wide Private Rented Sector (PRS) Tenants Project which will work on behalf of Private Rented Sector Tenants who are at risk of homelessness through the actions of their landlord or letting agency".  

Mike Dailly
"This comes at a time when the private rented sector has doubled since 2001 and where PRS households make up 15% of all households in Scotland.  It is also a time of legislative change with the Private Housing (Tenancies) (Scotland) Act 2016 in the process of being implemented; the new Act has the potential to make PRS tenancies more insecure". 

GLC's Prevention of Homeless Senior Manager Alistair Sharp said: "GLC’s Big Lottery Funded PRS research presented the voice of tenants living in the private rented sector in Glasgow and revealed that many feel Powerless with no expectation, choice or security; a private rented sector where a tenant’s right to a safe, secure, maintained and affordable home are too often ignored by letting agencies and landlords".
Alistair Sharp

"We will fight for tenants’ rights and provide financial inclusion and capability solutions that ensure the tenants voice is heard and that their rights as tenants are not ignored and will ensure tenants are empowered, are secure, are able to choose, can expect to live in a safe, well maintained, secure and affordable home and that Govan Law Centres Private Rented Sector Project dedicated city wide team will fight for them and with them to secure their rights".

Thursday, 17 November 2016

Why wait five years to reduce poverty in Scotland?

Jeane Freeman, Minister for Social Security
Govan Law Centre is concerned with the current debate on the Scottish Social Security Bill and we are calling on anti-poverty groups to back us to get this debate moving from “techno-speak”, to what is really important for Scots.

The transfer of social security powers to the Scottish Parliament should at very least prompt a national debate on poverty, low incomes, and re-distribution of income. And what we are going to do about it.  To date the debate has been about new government agencies, IT systems, inter-government wrangling, power transfers, and language. 

What poorer families need now, is cash in their pockets.

The working Group on Child Poverty urged ministers to use new social security powers at Holyrood to fund an increase in child benefit. The group said an increase of £5 per child per week would lift 30,000 children out of poverty in Scotland, at a cost of £256m a year.  

This is a start. So let’s do it.  Or at very least let us debate it in the Scottish Parliament. 

We need MSPs from all parties to back an amendment to the social security bill or a private members bill which proposes serious increases to benefits for vulnerable people in Scotland. 

Otherwise what is the point. Scots gain nothing from administering benefits in Stirling rather than Blackpool. It makes no difference to their lives where laws are made, decisions adjudicated or benefits paid. As long as decisions are accurate, quick and without fuss, and benefit rates are increased.

Why, for example, has the Scottish Government not produced a report and recommendations into the inadequacies of the social security system? How we can increase the incomes of vulnerable people in Scotland, as soon as we possibly can. We thought this is what it was all about. Is it because the Scottish Government don’t want to start this debate in Scotland? Is there no appetite to spend money on the poorest and tax the wealthy to pay for it?  This is our chance to start building the Scandinavian social model many say we need and want. 

Any new system needs be efficient to treat people with respect use the right language and make decisions quickly. And it will be complex to set up. It will need an IT system. But the Scottish Government have known this for a long time.

People in poverty cannot wait for years for a central administering agency to be set up in Scotland. We all know this will take years, and we will no doubt get a myriad of IT problems as we always do. But those on low incomes in Scotland need to know we are at least planning to make a step change increase in their incomes. Scottish ministers must get on top of this and lead the debate now. There is no excuse The Scottish Government has had years to prepare. They need to show people what can be done.

We need a substantive government report about how we can administer real increases in benefits in the meantime, while they set up a Scottish Social Security Agency. 

Local government can administer payments, they already administer housing benefit and council tax benefit - even though policy was set centrally by UK statutes. Surely they can do the same for any other benefit using Scottish statutes? They have everyone’s name and address.

Social work has powers under social work acts to make cash payments and arguably to set up benefits. They could be asked to make cash payments to disabled people who come within their care. We can use our imagination to make payments through self-directed care or other social work structures.

GLC’s worry is that rather than having an exciting debate about increasing incomes, redistribution, poverty reduction and inequality, we are having disappointing debate about where powers lie, new government agencies, IT systems and difficulty ministers are having.

If we need to we can phase in benefit increases but let us start on what those increases should be, and how we will pay for them in the interim and long term. When introducing child benefit in the 1970s the UK had similar problems, but they passed legislation and phased in child benefit over a few years.

That is what we need to do this in Scotland.

This is important. We need to set the tone of the debate now. Those who have the powers to improve the lives of the most vulnerable must be held accountable. The Scottish Parliament will have power over at least eleven social security benefits. Much more if they use their imagination and put their minds to it. We can choose a different social model. Our Scottish Government wants the whole social security system, we need to hold them to account and ask if this is the debate we can expect to have then why bother?

It’s not difficult. It’s about political will. Govan Law Centre proposes a campaign that everyone can join to get this into the Scottish Parliament. Here’s one example we’ve thought of that could be done quickly; there are many more which could immediately help the lives of people in Scotland.

A proposed Increase in Child Benefit (Scotland) Act 2016

1  Scottish Child Benefit
(1) There shall be a benefit to be known as Scottish child benefit.

(2) Subject to the provisions of this Part of this Act, a person who is treated as responsible for one or more children under the Child Benefit Act 2005 and is resident in Scotland, and whose child is resident in Scotland shall be paid an increase in child benefit called “Scottish child benefit”.

(3) Scottish child benefit shall be paid by Scottish ministers from moneys provided by Scottish Parliament.

2  Meaning of “child” and “person responsible for a child”
(1) For the purposes of this Act a person shall be treated as a child for any week in which he is treated as a child by the Child Benefit Act 2005.

(2) For the purposes of this Act a person shall be treated as responsible for a child for any week in which he is treated as a responsible by the Child Benefit Act 2005.

3  Rate of increase for Scottish child benefit
(1) Scottish child benefit shall be payable at such weekly rate as may be prescribed by Scottish Government ministers. 

(2) The weekly rate of child benefit will be no less than £5 per week per child.

(3) Rates may be prescribed in relation to different cases, whether by reference to the age of the child in respect of whom the benefit is payable or otherwise.

(4) The power to prescribe different rates under subsection (2) above shall be exercised so as to bring different rates into force on such day as the Scottish Ministers may by order specify.

(5) The power to introduce Scottish Child Benefit above shall be exercised on such day as the Scottish Ministers may specify by regulations.


Wednesday, 16 November 2016

Can you sue the Private Rented Housing Committee in Scotland?

Can you sue the Private Rented Housing Committee in Scotland?  GLC are currently acting in an appeal to the Inner House of the Court of Session against a decision of the Private Rented Housing Committee (PRHC). 

The question of law in issue is whether it was lawful for the PRHC to increase the rent of the tenant of a charitable, registered social landlord by 77% per month, by using private rented sector comparators in Glasgow.

The President of the Private Rented Housing Panel (PRHP) has responded by asserting that it is not competent to appeal against the PRHP or PRHC, and that any appeal should be against the social landlord. Reliance was placed on the Inner House opinion in Dundee City Council v. Dundee Valuation Appeal Committee and Fleming Hanson (2011) CSIH 73, and paragraph 37 of schedule 1 to the Tribunal and Inquiries Act 1992 (the 1992 Act). All of which would mean an appeal against the PRHC was incompetent.

GLC are quite clear that the President of the PRHP has failed to consider the consequential changes made to the 1992 Act by paragraph 17 of schedule 6 of the Housing (Scotland) Act 2006. Paragraph 17 amends paragraph 59 of schedule 1 of the 1992 Act to expressly include the "Private Rented Housing Committee". 

Section 11(7)(b)(i) of the 1992 expressly refers to a decision of a tribunal in paragraph 59 being one which can appealed against to the Court of Session.  Valuation committees are not so expressly mentioned, and therefore the Dundee City Council decision is of no relevance.

Accordingly, it would appear the PRHC can be appealed against in Scotland. The appellant is represented by GLC's Mike Dailly, Solicitor Advocate.

Thursday, 27 October 2016

Overwhelming unmet need for specialist personal insolvency advice in Scotland: update on the work of the Personal Insolvency Law Unit at GLC

Here, Alan McIntosh, Project Manager of Govan Law Centre's (GLC) Personal Insolvency Law Unit provides a brief update on some of the innovative work of our new service.

Over the last few months we have found that there is a overwhelming unmet need for specialist advice and support for clients in Protected Trust Deeds (PTDs) and who are bankrupt in Scotland. It has found many debtors are failing to obtain appropriate advice and representation in relation to:
  • Protecting their homes in PTDs and Bankruptcy; and
  • Obtaining advice and representation when their PTDs are at risk of failing.
The majority of cases that our specialised Personal Insolvency Law Unit has been dealing with have involved the debtor’s home when they have been threatened with being sold. Sometimes this has been as creditors have made the debtor bankrupt, but increasingly also involves cases where debtors have sought advice from advice services, like Citizen Advice Bureaux and insolvency practitioners and entered into solutions on their advice.

In one case Renfrewshire Law Centre working alongside with GLC's Personal Insolvency Law Unit, was able to make an offer of composition which was accepted by creditors, after an application to eject the debtors from their home had been in front of the sheriff for over a year. The PTD had been granted almost ten years earlier, despite initially only being expected to last three years.

Alan McIntosh, Project Manager
The problem with this case was when it was signed the proposal was that the debtor would not deal with the property to the end of the Protected Trust Deed, at which point they could re-mortgage. However, in that time the credit crunch occurred and clients were not able to re-mortgage, meaning despite continuing to pay their mortgage they lived with the threat of losing their home over that period.
In a similar case, granted around the same time, the £27,321 of debt the client granted the Trust Deed for grew to £52,507, due to statutory interest of 8% per annum being added. The case is still ongoing, however, when the client signed the Trust Deed he was advised he could re-mortgage at the end of the three years, but was not able to. Since then, with three children still living in the home, the mother of the family has passed away.
Another cases involved a client who had been referred onto an insolvency practitioner by a Citizen Advice Bureaux, in 2010, after the credit crunch, with the proposal being that the client could re-mortgage at the end of the Protected Trust Deed and deal with their equity then. The Trustee is now raising court action to sell the home, as the client has predictably struggled to re-mortgage in the current financial environment and with the credit rating they now have.

There have been other successes, however, with some lenders being prepared to show forbearance to debtors when the client’s circumstances have been explained, including that there have been disability issues in the family. However, even when these lenders are majority lenders in the bankruptcy, this has not always provided a solution and there is a number of on-going issues in such cases relating to technical procedural matters, that may still prevent a satisfactory solution being found.

The reality is personal insolvency law in Scotland is extremely complex and many debtors who are now trapped in solutions are struggling to source the specialist help they require to provide them with advice and assistance. Nearly all of Scotland’s free sector advice services are designed to advise clients on how to enter into bankruptcy and protected trust deeds, often with as we have found disastrous consequences, but there are no specialist services available to help people when things go wrong.
We aim to publish an interim report on our findings, based on our case work and relevant empirical evidence.  In the short time our Unit has been operating, it is clear there is a dearth of specialised advice available to clients who are in personal insolvency solutions, despite the serious consequences it can have for clients, risking their homes, often after they believed they had received best advice by people that should have been helping them.  

Sadly, all too often the initial advice given to clients was wrong, not impartial and the administration of the case has been flawed and contributed significantly to the risk of the case failing or the debtor losing their home.