Protected Trust Deeds Working Group Announce Findings?

10th August 2010

The Protected Trust Deeds Working Group (PTDWG) has announced 42 recommendations on how to best reform the Trust Deed system.

As previously announced the PTDWG has been considering whether changes need to be made to ensure Protected Trust Deeds remain both fair and fit for purpose.

One stunning finding from the report is the fact that 53% of the funds paid into Protected Trust Deeds actually went into paying the fees of the insolvency practitioners handling the cases.

Only 43% of the funds paid into Protected Trust Deeds actually found their way to the creditors who had agreed to the process in the first place.

The Herald reported such a case in March, where a fee of £13,000 was presented to creditors. Only the “dogged persistence” of creditor Scotwest Credit Union managed to eventually reduce the bill to £4,000, according to The Herald article.

Many observers will conclude that certain Trust Deed companies and insolvency practitioners can no longer be trusted to determine their own fee levels if they currently operate in such a manner.

One curious finding concerned the alleged miss-selling of Protected Trust Deeds by debt management companies. The public forum on www.Trust-Deed.co.uk provides clear evidence which indicates Scottish debtors are receiving poor information and advice from a wide variety of sources and on a significant scale.

Undoubtedly some debt management companies are involved in providing poor advice. However, it’s evident that significant problems also exist with the information provided directly by some Protected Trust Deed companies themselves, as well as from feeder marketing companies set up by certain Trust Deed operators.

Some observers may conclude that the focus on debt management companies in the report may be due, in part, to their lack of representation in the Working Group and the accompanying over-representation of insolvency practitioners themselves.

Group members are reported to have pledged: “To highlight and challenge examples of bad practice from DMCs (debt management companies) and debt-related websites”. It remains to be seen whether the insolvency community will ensure their internal advisors and feeder marketing companies also adhere to higher standards in the future.

The recommendations are now with The Scottish Government for their consideration.

For further advice on Protected Trust Deeds please do not hesitate to visit www.trust-deed.co.uk . We have forums and news articles just as informative as this one, so you can keep up with all the latest industry changes before you make any important decisions.

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