Can an IFA enter a protected trust deed in Scotland?
One question which the Trust-Deed.co.uk advice team come across from time-to-time is whether a financial advisor or independent financial advisor (IFA) or a mortgage broker can enter into a trust deed in Scotland to deal with their debts. In this article we will discuss the steps that a financial advisor or IFA must take to make sure that their career isn’t jeopardised should they go ahead with a protected trust deed.
More so than almost anyone, financial advisors know how easy it is to get into debt in the current economic climate and recession. Indeed, many financial advisors and IFAs have suffered a long period of decline in their businesses. The effect can be a double-edged sword; existing debts become harder to repay and so debtors take out further credit in order to manage from month to month. Over a period this can easily get you to a point where a protected trust deed, or an alternative debt management solution, becomes essential.
If you are a financial advisor or an IFA, and you have found yourself in a position where you are struggling to make your monthly repayments to creditors, you will want to seek advice from a fully qualified debt or protected trust deed advisor regarding the options open to you, like a trust deed. As part of this process, you and the advisor will need to work together to investigate whether a protected trust deed in Scotland poses a threat to your ability to work or trade.
If you are an employed advisor, the first thing you should review when you are considering taking on a trust deed is your contract of employment. There may be a clause about bankruptcy or sequestration. Fortunately a protected trust deed is not a sequestration, but there may be a clause about personal insolvency. Like sequestration, a protected trust deed is a form of personal insolvency. If such a clause exists in your contract you may need to notify your employer or HR team of your trust deed intentions.
If you cannot find anything in your employment contract about disclosing information about your trust deed, you may want to consider contacting your HR department anonymously to give them a brief outline of the circumstances and to see what feedback they provide. At larger firms you may well find out that you have colleagues that have sought similar guidance about using a protected trust deed in the past.
Please note that a contract which puts restrictions on you entering a protected trust deed does not automatically mean that you will lose your job if you take on a trust deed. Many employers are supportive and can put supervisory arrangements in place to enable you to carry on with your work.
As a financial advisor or IFA, you may find that professional bodies of which you are a member have codes of conduct that touch on issues surrounding personal insolvency or protected trust deeds. These should also be checked and queried appropriately if required.
A self-employed directly authorised IFA or mortgage broker may need to consult with the FCA (Financial Conduct Authority) before entering into a protected trust deed. We are aware of people who have been allowed to carry on trading, but it is for the FCA to make an assessment on a case-by-case basis.
As a financial advisor or an IFA, you will want to have a senior contact at whichever protected trust deed firm you are considering going ahead with. Your case is more complex than average and your needs greater; therefore a remote call-centre contact will not be appropriate. A face-to-face meeting with a senior trust deed advisor from the firm is essential in our view before going ahead with a protected trust deed.
What if you cannot go ahead with a protected trust deed? There are alternatives which may have fewer reporting requirements and associated restrictions. You may wish to read more about the informal debt management plan or the formal (but non-insolvency) debt arrangement scheme in Scotland.
If you’d like to find out more about using a trust deed if you are an IFA, visit Trust-Deed.co.uk today. Our forums will allow you to seek the advice and support of trust deed experts, and will give you the opportunity to talk to other professionals who are considering using a trust deed themselves. The website is also full of up-to-date, thorough information and advice. It also includes a helpline staffed by professionally qualified debt advisers who will be able to discuss your trust deed situation with you on a personal basis. Call now on 0800 043 7201 or visit the trust deed forum website today.
Trust Deed Latest News