Blog: Is Common Ground on the Common Financial Tool possible?

Alan McIntosh

Senior Money Adviser Alan McIntosh looks ahead to a future without the Common Financial Tool


The decision by Scottish Government, to withdraw the Common Financial Tool (Scotland) Regulations 2018 from the Scottish Parliament (for the second time) is to be welcomed.

The regulations, which had intended to replace the Common Financial Statement (CFS) with the Standard Financial Statement (SFS) as the Common Financial Tool (CFT), were withdrawn after the Economy, Energy and Fair Work Committee found they had “significant reservations” and took the “unanimous” view that the case for making the change was less than compelling.

The Common Financial Tool is the tool used in Scotland to decide how much someone pays towards their debts when in a protected trust deed or sequestration.

The concerns expressed by the Committee echoed many of those expressed during the oral evidence given to the Committee, particularly from those working in advice services:

• There was a lack of transparency around both Common Financial Tools;

• That the SFS may increase the workload on front line advisers by increasing the amount of

verification required to evidence client expenditure; and

• The figures used in both statements were arrived at using a methodology and format that was not, from its starting point, designed to ensure people had a reasonable standard of


So what now for the CFT?

The important question now, is what the Scottish Government and the Accountant in Bankruptcy do next. The current Common Financial Statement, which is due to be discontinued by its owners the Money Advice Trust, in April 2019, will have to have its figure updated for the new financial year.

The Minister, Jamie Hepburn, has suggested he will consider re-laying the regulations again (for a third time) to ensure the April 2019 changeover takes place.

On what appears to be the evidence of the Accountant in Bankruptcy, he has suggested the evidence provided by the advice sector was unrepresentative.

However, considering organisations like Stepchange, who are supportive of the Standard Financial Statement, have expressed their own concerns as to AIB evidencing requirements, that does not appear to be a view that will withstand much scrutiny.

What appears to be the case, from the perspective of someone who gave evidence to the Committee and was also involved in discussions with the Accountant in Bankruptcy prior to the regulations being laid, is the AIB themselves are keen to avoid scrutiny over their application of the CFT in Scotland and the evidential requirements they have been placing on advice agencies.

They have also been keen to propose that any concerns people have will be addressed in post legislative scrutiny, but for an advice sector that has struggled for three years with the way the AIB

have introduced the Common Financial Tool, to miss the opportunity to use Parliament to do its job and scrutinise legislation and its application would be a missed opportunity.

Reasonable questions also have to be asked what value any post legislative review would have, if all it involves is the AIB reviewing their own practice. They clearly were keen to avoid certain evidence being heard by the Committee and as has been shown have been quick to dismiss it as unrepresentative. Would they not just take the same view in any post legislative review?

Understandably, no Minister wants to have to explain to a Parliamentary Committee why his civil servants are intrusively, requiring consumers provide evidence that they are purchasing

incontinence pads. Equally, no Government agency wants to have to explain to their Minister why they are being asked those questions in the first place.

The way forward

I would suggest the way forward is for the Scottish Government to step back from relaying the regulations and to instead seek to uprate the figures currently being used in the Common Financial Statement, to reflect the rise in the cost of living.

A full independent review should then be performed to examine how the Common Financial Tool has been implemented over the last three years and the findings of that review used to inform the way forward, which may include bringing forward regulations, for a third time, to introduce the Standard Financial Statement.

If that doesn’t happen and the Scottish Government choose to proceed with the regulations again, despite the Committee’s concerns, then what further evidence do the advice sector require to show that the AIB is not listening?

The views expressed above are Mr McIntosh’s own own.

He blogs at

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