8.1 The existing legislation and other measures recently taken by the Scottish and UK Governments already offer home owners in Scotland considerable protection when appropriately accessed. However, we believe that our recommendations would ensure better protection, which is more easily accessed and more widely available across Scotland, for home owners at risk of repossession.
8.2 We also recognise that the current economic climate affects tenants in the social rented sector and note the need to consider changes to enhance their security.
8.3 In the current difficult economic circumstances, with forecasts of a potential significant rise in repossessions occurring this year, we believe these proposals assume even greater importance. We recognise, however, that our legislative proposals would need to be subject to a formal consultation process. This should involve a wide range of interested stakeholders, so that issues such as the impact on lenders and the smooth running of other court business, could need to be more formally assessed.
8.4 We recommend that the actions below are taken by the Scottish Government and other interested parties.
No. | Recommendation | Follow Up Action & Responsibility | Paragraph Reference |
|---|
1. | Lenders and the courts to ensure clear and easy to understand information and assistance for borrowers. | Lenders / Courts | 2.9 |
2. | Visible warnings as to the risks of non-regulated sale-and-rent-back schemes. | Sale-and-Rent-Back Providers and Scottish Government | 2.9 |
3. | Improved relevant advice for those facing redundancy. | Lenders and Employers | 2.9 |
4. | Those at risk of losing their homes to be fast tracked when receiving face to face assistance. | Advice Agencies | 2.9 |
5. | Capacity across the sector to be made a priority when allocating resources (with support to gain accreditation). | Scottish Government | 2.9 |
6. | Liaison between Scottish Government, CoSLA, SLAB and Advice Agencies to address gaps in advice provision | Scottish Government, CoSLA, SLAB, Advice Agencies | 2.9 |
7. | The Scottish Government to keep under review, in these difficult and uncertain circumstances for homeowners, whether funding for schemes is adequate (and to recognise that further funding may still be required), and whether eligibility requirements are appropriate. | Scottish Government | 3.5 |
8. | The UK Government and lenders to be encouraged to ensure that there is maximum participation in the UK Home Owners Mortgage Support Scheme; that it be a requirement for those lenders receiving significant lenders of public funding to assist others with their own financial problems. | UK Government and Lenders | 3.8 |
9. | The risk that the Home Owners Mortgage Support Scheme simply postpones the risk of repossession to a later date be monitored as the scheme is rolled-out. | UK Government | 3.9 |
10. | SMI be made available when a household has lost one income to make the scheme fairer and to provide greater reassurance to those families facing an uncertain future. | UK Government | 3.11 |
11. | Rate at which SMI is paid to be fixed to the actual rate of interest paid by the homeowner. | UK Government | 3.11 |
12. | Lenders to be encouraged to show similar restraint with Scottish borrowers wherever possible (with court action being considered only as a last resort), and where this is in the borrower's best interest. | Scottish Government, UK Government and Lenders | 4.7 |
13. | Regular data to be monitored on the impact of HMS and its take-up in Scotland. | Scottish Government, UK Government and Lenders | 4.7 |
14. | Lenders to be encouraged to look at options for rescheduling debt to make repayment more sustainable. | Lenders | 4.7 |
15. | Lenders and advice agencies to liaise as to policies and procedures for struggling homeowners. | Lenders and Advice Agencies | 4.7 |
16. | Lenders' advice for consumers to be made as simple as possible; in plain English and taking account of any differences in the legal position in Scotland. | Lenders | 4.8 |
17. | Sheriff Court Ordinary Cause Rules (and relevant primary legislation) to be amended (papers to include easily understandable plain English information, lay representation, ordinary cause actions relating to mortgage repossessions to be held in clusters, and simplification of application process under the Mortgage Rights (Scotland) Act 2001. | Scottish Government and Rules Council | 5.14 |
18. | Interest rate chargeable for standard securities be linked to the base rate, rather than tied to the judicial rate (currently set at 8%) | Scottish Government | 5.24 |
19. | Solicitors be encouraged to contact SLAB whenever they have concerns about the impact of the clawback or contribution arrangements on their clients' ability to access legal aid. | SLAB and Law Society of Scotland | 5.24 |
20. | Clarification by SLAB as to the steps that may be taken to recover legal aid costs, particularly about how available options for debt recovery would be used where a standard security is in place. | SLAB | 5.24 |
21. | Operation of the legal aid system to be kept under review (especially the income/capital thresholds at which contributions have to be made), and wherever possible simplify processes to encourage greater willingness among solicitors to engage in legal aid cases. | Scottish Government and SLAB | 5.24 |
22. | Scottish Government to consider whether SLAB should be given a greater discretion to waive clawback where the cost (for instance of the standard security) would be disproportionate to the clawback concerned. | Scottish Government | 5.24 |
23. | Subject to formal consultation with all affected interests, and where the impact upon court time and on lenders can be examined in more detail, the Scottish Government to bring forward legislation to ensure that the protection available for the borrower through the Mortgage Rights (Scotland) Act should apply in all cases not just those where the borrower defends the action (except where the borrower has voluntarily abandoned the property). | Scottish Government | 6.25 |
24. | Scottish Law Commission be invited to review the law of standard securities, over the long term. | Scottish Government and Scottish Law Commission | 6.25 |
25. | Scottish Government to take steps to amend the primary legislation to require lenders to show that they have considered every reasonable alternative to repossession, and the courts to consider the extent to which they have done that when deciding on repossession cases. | Scottish Government | 6.30 |
26. | Legislative protection for home owners facing repossession to be improved through amendments to the Conveyancing and Feudal Reform (Scotland) Act 1970 and the Mortgage Rights (Scotland) Act 2001. | Scottish Government | 6.34 |
27. | The Financial Services Authority to be asked to require lenders to provide regional data to better understand the level of repossessions in Scotland and other parts of the UK. | Scottish Government to liaise with FSA | 7.2 |
28. | Court data to be regularly analysed to compare the number of repossession actions raised in sheriff courts with the number of decrees granted over the same period | Scottish Government | 7.2 |