What is the Common Financial Tool
Debt advisers advising clients on Scottish statutory debt relief and management options are obliged to use the CFT when assessing a client’s financial situation and ability to pay a contribution. A trustee must use the CFT to determine the amount of contribution payable in a PTD and bankruptcy and a debt adviser must use the CFT to determine the expected contribution payable under the DAS and on submission of a client’s application for bankruptcy. The CFT is a mirror image of the Common Financial Statement (CFS). See here for more about the CFS. The contribution payable by a client in a Scottish statutory debt solution is their surplus income over the lower of the client’s expenditure or the ‘trigger figures’ (see here).1Reg 15 B(S) Regs; reg 3 CFT(S) Regs The client may be allowed an amount of expenditure that exceeds the trigger figures. The debt adviser/trustee must demonstrate the rationale for the increased expenditure by providing an explanation for each individual occurrence. Evidence should be retained and made available on request by the Account in Bankruptcy (AiB).
There is a requirement to obtain primary evidence associated with the categories included with ‘essential expenditure’ during the pre-application stage.2CFT guidance ss1 and 1.8, The AiB’s Notes for Guidance: Common Financial Tool are available on its website.3 This section is based on that guidance. Any person applying the CFT must have regard to the AiB guidance on:4Reg 15 B(S) Regs; reg 3 CTF(S) Regs •the treatment of types of income and expenditure to be taken into account;
•how income and expenditure are verified by the debt adviser and the trustee;
•the conduct of debt advisers in carrying out their functions in relation to the CFT.