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In writing this (and the other stickies), people must be aware that the new regulations are far from satisfactory, open to too much interpretation in places, and some things which should be in place and absolutely crystal clear are not. We have had to work therefore on the advice available at the time of writing. This may have changed by the time you read this – that is what is happening at the moment. Nothing is cast in stone save this is going to hit us in four days time.
LB do not have all the answers. Nobody has all the answers. We can only give you our best interpretation of things and clear up some commonly held misconceptions about things like global levies taking place as soon as debts are passed to bailiffs. This is NOT the case.
It is partly a case of ‘please don’t shoot the messenger’. This series of stickies will not give you a perfect guide to the new regulations, as the regulations are a mess and nobody is able to give a full guide to them. Obviously we will update and develop them as time goes on. A VAST amount of time has been invested in getting things as accurate as they can be at the time of posting, and being as open as we can be. We have tried to strike the balance between giving information and giving too much information to members. It is a thankless task! Eg – we mention an obligation for Enforcement Agents (EA’s) to give seven clear days notice of a visit (the Compliance Stage mentioned in the previous ‘Sticky’. Do we mention what has to be in that notice or not? We have decided not to as it is written quite clearly in the regulations, and the regulations are clearly linked.
It is a shame the MOJ have not got this right having had so long to do so.
We have split this 'Sticky' into various sections, each forming a new area.
__________________________________________________ ____________________________________________
Transitional Arrangements
This is a link to legislation regarding transitional arrangements:
The Tribunals, Courts and Enforcement Act 2007 (Consequential, Transitional and Saving Provision) Order 2014
The new regulations are due to take effect on 6th April and debtors will be in for a huge shock.
The government have issued statutory regulations to cover cases that are already being managed "in house" by the enforcement companies. In essence if a debtor's account is currently subject to a payment arrangement, if the account is maintained perfectly, things will continue under the old regulations. If, however, the account defaults (even by only one day – we all know bailiff companies!), after 6th April the enforcement company may make an 'enforcement visit' and fees of £235 will be legally applicable.
Furthermore, if no payment arrangement is yet in place.....then it is vitally important to make sure that the debtor contacts the company immediately to set up such an arrangement.
The days when a debtor can ignore bailiff correspondence are finished.
__________________________________________________ _________________________________________
Currently, a large percentage of debtors pay the entire debt (or enter into payment arrangement) on receipt of the ‘14 day letter’ from the local authority. By sheer stupidity this requirement disappears (according to the MOJ another 'department' is being held responsible for this change). The implications of which will be that a debtor will NOT know the outcome of the local authorities application to court to request permission to issue a Liability Order until they receive a ‘7 day letter' from the ENFORCEMENT COMPANY. And crucially by this time, the debt due under the Liability Order will have INCREASED by £75.00!
Common sense alone would dictate that removing the obligation of the local authority to send a '14 day letter' will mean a staggering INCREASE in the number of cases sent to bailiffs and naturally a staggering increase in debtors writing to the enforcement company to outline 'vulnerability' or to offer an affordable payment plan (some authorities will still send the 14 day letter, some won’t!)
Also there is almost certain to be a staggering increase in telephone calls to the enforcement companies. All of this is supposed to take place within 7 days of the letter (not 14 days) from the enforcement company if the debtor wishes to avoid an 'enforcement fee' of £235 being applied and the immediate removal of the vehicle if payment cannot be made at the time of the visit.
It is a known FACT that some bailiff companies address letters 2 days (or even longer) before being collected by the likes of TNT mail etc. These postal providers guarantee a 3 working day delivery time. It is therefore obvious that imposing a '7 day letter' requirement (instead of 14 days) will almost guarantee that the letter will not arrive in time to avoid an 'enforcement' visit.
Also, under the new regulations debtors that wish to make payment by cheque, postal order or bankers draft will NOT be able to avoid an 'enforcement visit' and the debt increasing by £235. This will mainly apply to debtors of a pension age who still use cheques and 'vulnerable debtors' without a bank account.
Complaints are bound to soar and with common sense this could have been avoided.
__________________________________________________ ___________________________________________
The Main Pieces of Legislation
Here is a link to the Tribunals, Courts and Enforcement Act 2007.
Here is a link to The Taking Control of Goods Regulations 2103.
To Recap
Under the new regulations (from April 6th), all new cases for Council Tax and PCN’s will be dealt with under the legislation above.
1. The Compliance Stage. As soon as the debt is passed to bailiffs, the debtor is immediately liable for a fee of £75.00. The bailiff can take control of the debtor’s goods by giving at least seven days notice (excluding Sundays, bank holidays, Good Friday and Christmas Day) – the exact content of this notice is set out in Part 2 Section 7 of Link 2 above. This the ‘Compliance Stage’ where it is critical the debtor contacts the bailiffs and either settles the debt or enters into a ‘Controlled Goods Arrangement’ which MUST then be stuck to religiously to avoid further costs. If a court thinks the debtor may move or dispose of the goods in order to avoid them being taken control of, it may order a shorter period of notice.
2. The Enforcement Stage. If the debtor does not contact the EA during this period, the bailiff will visit the debtor to take formal control of the debtor’s goods, and undertake activities necessary prior to the removal of goods. This incurs a further fee of £235.00 (+ 7.5% on the portion of any debt over £1500). The bailiff can visit up to five times. Methods of entry will be covered in the next ‘Sticky’, including use of force.
3. Sale. An EA will attend either to remove goods for sale, or if the sale is to take place at the premises, to start preparations for this. This stage ends when the goods have been sold.
We now start hitting potential problems. Of particular note is Schedule 12 of the TCE Act:
Ways of taking control:
13 (1) To take control of goods an enforcement agent must do one of the following:-
(a) secure the goods on the premises on which he finds them;
(b) if he finds them on a highway, secure them on a highway, where he finds them or within a reasonable distance;
(c) remove them and secure them elsewhere;
(d )enter into a controlled goods agreement with the debtor.
__________________________________________________ _______________________________________
As you read the following section, you need to understand an Interpleader is basically where goods belonging to someone else (a third party) have been levied upon (or Taken Control Of in new regulation speak) and the third party needs to prove they own the goods (they have good title to the goods) to get them back again. An example of the problem under the new legislation is given after the following link.
Interpleaders are pretty much covered under Part 6 of the new regulations (not entirely accurate for the pedants here!)
So, here’s the scenario. You go to visit friends who owe money to Enforcement Agents (EA’s – formerly bailiffs). In all innocence you park your £15000 car outside your friend’s (the debtor’s) house. You go out for a meal. While you are out, an EA visits, and your £15000 car is taken under control, entirely legally, under the new regulations.
You, the third party, may now have to pay the amount of ‘an independent valuation’ of £15000 into the court while they decide who has good title to the goods (it is assumed – but only assumed, that the full amount will be payable only if the claim is dubious). Clearly this is very difficult as:
(a) you may well not have £15000 to pay to the court;
(b) if the car is on HP, is it the finance company who has to lodge the £15000 with the court? The new regulations do not make this clear;
(c) some think the third party referred to is the bailiff, though I am not personally of that opinion. The link is above – you decide! This is not good enough, and……….. it gets worse!
__________________________________________________ ____________________________________________
Let’s look at the situation as things are currently with ‘Section 6’ issues.
Formerly interpleaders (now effectively covered by Section 6 linked above) were dealt with under ‘writs of fi fa’ in the High Court. There are between 45,000 and 70,000 such writs issued each year and the High Court deal with all these "Interpleader" applications.
From April 6th, Council Tax and unpaid PCN’s will also all come under Section 6 if good title is disputed.
Last year, there were approximately 3.3 million Council Tax Liability Orders issued, with approximately 50% going to bailiffs. With unpaid PCN’s there are approximately 1.4 million warrants issued to bailiffs each year. This amounts to a staggering 3.05 million bailiff actions.
Now think how often you read about bailiffs levying on property which belongs to someone else. Can you imagine the number of Interpleader applications there could be hitting the County Courts each year? Can you imagine the number of people having to pay the courts the amount of the ‘independent valuation’ (carried out by whom exactly?) – it is a huge mess and is unlikely to be sustainable, but the MOJ have overlooked this.
Here is an excerpt written by a HCEO, “I understand the principle behind it, but the manner in which it has been set out is completely wrong in my opinion. It is not right that an innocent party will have to pay the value of the goods seized into court upon their application. There is an option for the court to reduce this sum but the principle is still wrong. Yes, it will reduce fraudulent claims (of which there really are many) but this provision is not the way to do that.
It is just more proof that this is being rushed through without proper consideration for how it will work in practice, if at all.
There are many issues for the enforcement industry to, but these seem to be falling on deaf ears also. The Government has had years to get this right and as always it's rushed through, last minute, by people who do not understand all the factors.”
__________________________________________________ ____________________________________________
How Was the New Fee Structure Arrived At?
This section has been added here in July 2014 for ease of reference. Below is a jpeg of a post by Amethyst along with the pdf from that jpeg. This explains how the new fee structure was arrived at. Please read the jpeg first.
LB do not have all the answers. Nobody has all the answers. We can only give you our best interpretation of things and clear up some commonly held misconceptions about things like global levies taking place as soon as debts are passed to bailiffs. This is NOT the case.
It is partly a case of ‘please don’t shoot the messenger’. This series of stickies will not give you a perfect guide to the new regulations, as the regulations are a mess and nobody is able to give a full guide to them. Obviously we will update and develop them as time goes on. A VAST amount of time has been invested in getting things as accurate as they can be at the time of posting, and being as open as we can be. We have tried to strike the balance between giving information and giving too much information to members. It is a thankless task! Eg – we mention an obligation for Enforcement Agents (EA’s) to give seven clear days notice of a visit (the Compliance Stage mentioned in the previous ‘Sticky’. Do we mention what has to be in that notice or not? We have decided not to as it is written quite clearly in the regulations, and the regulations are clearly linked.
It is a shame the MOJ have not got this right having had so long to do so.
We have split this 'Sticky' into various sections, each forming a new area.
__________________________________________________ ____________________________________________
Transitional Arrangements
This is a link to legislation regarding transitional arrangements:
The Tribunals, Courts and Enforcement Act 2007 (Consequential, Transitional and Saving Provision) Order 2014
The new regulations are due to take effect on 6th April and debtors will be in for a huge shock.
The government have issued statutory regulations to cover cases that are already being managed "in house" by the enforcement companies. In essence if a debtor's account is currently subject to a payment arrangement, if the account is maintained perfectly, things will continue under the old regulations. If, however, the account defaults (even by only one day – we all know bailiff companies!), after 6th April the enforcement company may make an 'enforcement visit' and fees of £235 will be legally applicable.
Furthermore, if no payment arrangement is yet in place.....then it is vitally important to make sure that the debtor contacts the company immediately to set up such an arrangement.
The days when a debtor can ignore bailiff correspondence are finished.
__________________________________________________ _________________________________________
Currently, a large percentage of debtors pay the entire debt (or enter into payment arrangement) on receipt of the ‘14 day letter’ from the local authority. By sheer stupidity this requirement disappears (according to the MOJ another 'department' is being held responsible for this change). The implications of which will be that a debtor will NOT know the outcome of the local authorities application to court to request permission to issue a Liability Order until they receive a ‘7 day letter' from the ENFORCEMENT COMPANY. And crucially by this time, the debt due under the Liability Order will have INCREASED by £75.00!
Common sense alone would dictate that removing the obligation of the local authority to send a '14 day letter' will mean a staggering INCREASE in the number of cases sent to bailiffs and naturally a staggering increase in debtors writing to the enforcement company to outline 'vulnerability' or to offer an affordable payment plan (some authorities will still send the 14 day letter, some won’t!)
Also there is almost certain to be a staggering increase in telephone calls to the enforcement companies. All of this is supposed to take place within 7 days of the letter (not 14 days) from the enforcement company if the debtor wishes to avoid an 'enforcement fee' of £235 being applied and the immediate removal of the vehicle if payment cannot be made at the time of the visit.
It is a known FACT that some bailiff companies address letters 2 days (or even longer) before being collected by the likes of TNT mail etc. These postal providers guarantee a 3 working day delivery time. It is therefore obvious that imposing a '7 day letter' requirement (instead of 14 days) will almost guarantee that the letter will not arrive in time to avoid an 'enforcement' visit.
Also, under the new regulations debtors that wish to make payment by cheque, postal order or bankers draft will NOT be able to avoid an 'enforcement visit' and the debt increasing by £235. This will mainly apply to debtors of a pension age who still use cheques and 'vulnerable debtors' without a bank account.
Complaints are bound to soar and with common sense this could have been avoided.
__________________________________________________ ___________________________________________
The Main Pieces of Legislation
Here is a link to the Tribunals, Courts and Enforcement Act 2007.
Here is a link to The Taking Control of Goods Regulations 2103.
To Recap
Under the new regulations (from April 6th), all new cases for Council Tax and PCN’s will be dealt with under the legislation above.
1. The Compliance Stage. As soon as the debt is passed to bailiffs, the debtor is immediately liable for a fee of £75.00. The bailiff can take control of the debtor’s goods by giving at least seven days notice (excluding Sundays, bank holidays, Good Friday and Christmas Day) – the exact content of this notice is set out in Part 2 Section 7 of Link 2 above. This the ‘Compliance Stage’ where it is critical the debtor contacts the bailiffs and either settles the debt or enters into a ‘Controlled Goods Arrangement’ which MUST then be stuck to religiously to avoid further costs. If a court thinks the debtor may move or dispose of the goods in order to avoid them being taken control of, it may order a shorter period of notice.
2. The Enforcement Stage. If the debtor does not contact the EA during this period, the bailiff will visit the debtor to take formal control of the debtor’s goods, and undertake activities necessary prior to the removal of goods. This incurs a further fee of £235.00 (+ 7.5% on the portion of any debt over £1500). The bailiff can visit up to five times. Methods of entry will be covered in the next ‘Sticky’, including use of force.
3. Sale. An EA will attend either to remove goods for sale, or if the sale is to take place at the premises, to start preparations for this. This stage ends when the goods have been sold.
We now start hitting potential problems. Of particular note is Schedule 12 of the TCE Act:
Ways of taking control:
13 (1) To take control of goods an enforcement agent must do one of the following:-
(a) secure the goods on the premises on which he finds them;
(b) if he finds them on a highway, secure them on a highway, where he finds them or within a reasonable distance;
(c) remove them and secure them elsewhere;
(d )enter into a controlled goods agreement with the debtor.
__________________________________________________ _______________________________________
As you read the following section, you need to understand an Interpleader is basically where goods belonging to someone else (a third party) have been levied upon (or Taken Control Of in new regulation speak) and the third party needs to prove they own the goods (they have good title to the goods) to get them back again. An example of the problem under the new legislation is given after the following link.
Interpleaders are pretty much covered under Part 6 of the new regulations (not entirely accurate for the pedants here!)
So, here’s the scenario. You go to visit friends who owe money to Enforcement Agents (EA’s – formerly bailiffs). In all innocence you park your £15000 car outside your friend’s (the debtor’s) house. You go out for a meal. While you are out, an EA visits, and your £15000 car is taken under control, entirely legally, under the new regulations.
You, the third party, may now have to pay the amount of ‘an independent valuation’ of £15000 into the court while they decide who has good title to the goods (it is assumed – but only assumed, that the full amount will be payable only if the claim is dubious). Clearly this is very difficult as:
(a) you may well not have £15000 to pay to the court;
(b) if the car is on HP, is it the finance company who has to lodge the £15000 with the court? The new regulations do not make this clear;
(c) some think the third party referred to is the bailiff, though I am not personally of that opinion. The link is above – you decide! This is not good enough, and……….. it gets worse!
__________________________________________________ ____________________________________________
Let’s look at the situation as things are currently with ‘Section 6’ issues.
Formerly interpleaders (now effectively covered by Section 6 linked above) were dealt with under ‘writs of fi fa’ in the High Court. There are between 45,000 and 70,000 such writs issued each year and the High Court deal with all these "Interpleader" applications.
From April 6th, Council Tax and unpaid PCN’s will also all come under Section 6 if good title is disputed.
Last year, there were approximately 3.3 million Council Tax Liability Orders issued, with approximately 50% going to bailiffs. With unpaid PCN’s there are approximately 1.4 million warrants issued to bailiffs each year. This amounts to a staggering 3.05 million bailiff actions.
Now think how often you read about bailiffs levying on property which belongs to someone else. Can you imagine the number of Interpleader applications there could be hitting the County Courts each year? Can you imagine the number of people having to pay the courts the amount of the ‘independent valuation’ (carried out by whom exactly?) – it is a huge mess and is unlikely to be sustainable, but the MOJ have overlooked this.
Here is an excerpt written by a HCEO, “I understand the principle behind it, but the manner in which it has been set out is completely wrong in my opinion. It is not right that an innocent party will have to pay the value of the goods seized into court upon their application. There is an option for the court to reduce this sum but the principle is still wrong. Yes, it will reduce fraudulent claims (of which there really are many) but this provision is not the way to do that.
It is just more proof that this is being rushed through without proper consideration for how it will work in practice, if at all.
There are many issues for the enforcement industry to, but these seem to be falling on deaf ears also. The Government has had years to get this right and as always it's rushed through, last minute, by people who do not understand all the factors.”
__________________________________________________ ____________________________________________
How Was the New Fee Structure Arrived At?
This section has been added here in July 2014 for ease of reference. Below is a jpeg of a post by Amethyst along with the pdf from that jpeg. This explains how the new fee structure was arrived at. Please read the jpeg first.
