Animals, bankruptcy, financial ombudsman, housing and tax

Public Policy Highlights February 2024

Financial Ombudsman Service consultation on 2024/25 plans and budget

The Law Society of Scotland responded to the Financial Ombudsman Service’s (FOS) 2024/25 plans and budget consultation, restricting its comments to the proposals on charging professional representatives.

The response highlighted that charging professional representatives could discourage complainants from engaging a solicitor to assist them with a complaint to the FOS; discourage solicitor firms from offering their services to assist complainants with such complaints, and ultimately may create a barrier to access to justice for consumers who have experienced a detriment.

The response noted that Scottish solicitors are subject to robust regulation by the Society, and that solicitors must act in their clients’ best interests and fees charged by solicitors must be fair and reasonable.

The response recognised the challenges for the FOS arising from poor practice by professional representatives but did not consider the proposals for charging an appropriate or proportionate response.

Find out more and read our response in full

Bankruptcy and Diligence (Scotland) Bill

The Society issued a briefing ahead of the Stage 1 debate on the Bankruptcy and Diligence (Scotland) Bill in the Scottish Parliament on 6th February 2024.

The briefing supported the introduction of the Bill, noting that legislation in this area was overdue and that it was desirable to update existing bankruptcy and diligence legislation.

On the proposed mental health moratorium, the briefing highlighted that much of the detail was left to regulations. The briefing referred to the Society’s response to the January 2024 Scottish Government consultation on the proposed process for a mental health moratorium, and highlighted the need for the moratorium to strike a balance between protecting vulnerable debtors and managing the impact on creditors.

The briefing was generally supportive of proposed Modification of the Bankruptcy (Scotland) Act 2016 and diligence reforms. However, in respect of diligence reforms the briefing did highlight that the proposed disclosure requirement would increase costs for banks and other arrestees dealing with attempted arrestments. Given that such costs could be passed on to consumers and business, the briefing called for the requirements of disclosure to be as light touch and non-onerous as possible.

The briefing also highlighted several areas where consideration could be given to further reform, including reforming adjudication for debt or replacing it with land attachment (and residual attachment) or an equivalent; making Information Disclosure Orders (IDOs) under the Bankruptcy and Diligence etc. (Scotland) Act 2007 available by regulations to improve transparency and to assist the recovery of debts, and the payment of statutory interest on the recall of sequestration under the 2016 Act.

Find out more and read our briefing in full

Aggregates Tax and Devolved Taxes Administration (Scotland) Bill

The Law Society of Scotland Tax Law Sub-Committee responded to the Finance and Public Administration Committee’s call for views on the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill. The Bill was introduced in November 2023 and is currently at Stage 1. Part 1 of the Bill sets out the main aspects of the Scottish Aggregates Tax (SAT), including the key definitions, proposed exemptions and reliefs, and how it is to be calculated. Part 2 provides for a number of amendments to the Revenue Scotland Tax Powers Act 2014, which are intended to support the efficient and effective collection of tax by Revenue Scotland.  

The response mainly focused on the administrative amendments to the 2014 Act. It noted that while changes made to improve the efficiency of the devolved tax system were welcomed, there were concerns with some of the proposals, and areas where further information would be welcomed. For example, in relation to the proposed power for Revenue Scotland to refuse a repayment claim for tax where the claimant has failed to pay other devolved tax due (section 52), the response encouraged further information on its intended scope – particularly whether this only covers tax arising from a different devolved tax (to that in relation to the repayment claim), or whether this would apply in relation to a separate liability arising under the same tax. The response also highlighted concerns regarding the proportionality and necessity of the proposed power for Revenue Scotland to offset a taxpayer debit against a credit (section 56), also welcoming greater information on the intended use and policy basis for the introduction of the power.

The response highlighted several further technical legislative changes that would be welcomed to support the effective administration of devolved taxes in Scotland, should it be possible for these to be legislated for in the Bill. These related to aspects of the Land and Buildings Transaction Tax, including in relation to group relief and sub-sale development relief.

In relation to the SAT, the response noted that the Scottish Government’s overall approach to taxation is embedded in economist Adam Smith’s four principles of certainty, convenience, efficiency and proportionality to the ability to pay, and based on a firm approach to tax avoidance and a commitment to stakeholder engagement – and that it is important therefore that the proposed tax respects these principles.

The importance of any changes to the policy and legislative position in this area being accompanied by an appropriate awareness-raising campaign and clear guidance to assist taxpayers and their professional advisers was also noted.

The Society’s Tax Law Sub-Committee Convener, Isobel d’Inverno, will be giving evidence to the Finance and Public Administration Committee at the Scottish Parliament on the morning of Tuesday 12th March. You can watch this live online.

Find out more and read our response in full

Animal Welfare (Livestock Exports) Bill

The Law Society of Scotland Rural Affairs Committee prepared a briefing on the Animal Welfare (Live Exports) Bill ahead of its second reading in the House of Lords. The Bill has already progressed through the House of Commons, and passed its third reading on 15th January 2024. The Bill makes provision to prohibit the export of livestock for slaughter, including fattening for subsequent slaughter, beginning in or transiting through Great Britain to EU member states and other third countries.

The briefing welcomed the progression of the Bill, noting that the provisions for the prohibition on the export of relevant livestock had previously been included in the Animal Welfare (Kept Animals) Bill, which was withdrawn in May 2023. The briefing focused on the Bill as applicable in Scotland and highlighted the developments of the Legislative Consent Memorandum (LCM), which was lodged by the Scottish Government in December 2023. The main findings of the Delegated Powers and Law Reform Committee and the Rural Affairs and Islands Committee, in their respective reports on the LCM, were highlighted – in particular, that the Rural Affairs and Islands Committee (the lead committee for consideration of the LCM) agreed with the Scottish Government’s position to recommend consent to the Bill.

The briefing noted that the detail of how the prohibition on the export of relevant livestock from Great Britain (GB) is to be set out in secondary legislation, and that a consistent approach may be taken through a single GB-wide instrument if appropriate. In this context, the importance of the proposed enforcement regime being communicated to stakeholders as early as possible to allow for necessary planning, preparation and additional engagement was highlighted. The briefing also welcomed clause 3, subsection (3), which provides that the Secretary of State may only make enforcement regulations containing provisions that could be made by Scottish or Welsh Ministers with their consent. The requirement in clause 4, that regulations made under the powers in the Bill would be subject to the affirmative procedure (or equivalent in the UK Parliament where applicable), was also welcomed.

Find out more and read our briefing in full

Housing (Cladding Remediation) (Scotland) Bill

The Law Society of Scotland Property and Land Law Reform Sub-Committee and Property Law Committee have recently provided comments on the Housing (Cladding Remediation) (Scotland) Bill – responding to the Local Government, Housing and Planning Committee’s call for views on the Bill, and also providing oral evidence to the committee at its evidence session on 30th January 2024.

The Bill was introduced in November 2023 and is currently at Stage 1. The Bill is intended to facilitate the delivery of the Scottish Government’s Cladding Remediation Programme. It gives powers to Scottish Ministers to assess and remediate certain types of buildings with unsafe cladding – and record these assessments and any remediation works completed in a new Cladding Assurance Register. The Bill also provides powers to establish a Responsible Developers Scheme.

Our comments welcomed measures to improve the safety of residents and owners of buildings with an external wall cladding system in Scotland, recognising the importance of rapid progress being made given the urgent need to remediate the safety issues posed by cladding.

The response and our oral evidence noted areas of the Bill where greater clarity and further consideration would be welcomed to better achieve its aims and ensure the proposals operate effectively. For example, welcoming greater clarity around the question of what happens once a property is placed on the Cladding Assurance Register, in addition to other transactional and transitional matters; and how a purchaser would be able to access information on the status of an assessment or remediation works regarding a property they are intending on purchasing.

The comments also welcomed greater clarity in relation to the appeal mechanisms once remediation works have been arranged to be carried out – including the relevant timescales, and the provisions that an appeal would be deemed dismissed if it were not determined within 21 days.

Find out more and read our response in full

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