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Consultation Paper on Bailiff Reform.
In this particular Newsletter, I will be addressing Chapter 5 and Chapter 9 of the Consultation paper on bailiff reform.
Chapter 5: Costs of Enforcement Related Services: Questions 33-45Any increase in the statutory fee will not be welcome by debtors or indeed the advice sector. At present, there is a completely different statutory fee scale for the collection of unpaid council tax, parking charge notices, criminal fines imposed by the magistrate’s court and child support agency arrears. This is complete and utter nonsense and MOJ are hoping to overcome this by introducing a set fee scale.
If this Consultation had been issued 2 or 3 years ago, I would very likely have been highly critical of the proposed fee scale. However, in the past year since this awful recession has impacted on the vast majority of individuals, it is sadly the case that many bailiff companies are routinely “interpreting” the fee scale in a way that never used to happen. As an example, it is fast becoming “commonplace” for a bailiff to charge an “enforcement fee” of approx £150-£250 (or even more) when making an initial visit to a property to enforce a Liability Order for unpaid council tax. There is of course no provision within the current statutory fee scale for an “enforcement fee” and, in reality, this is really an “attending to remove fee” which should not be charged unless a prior valid levy had been made on the debtor’s goods.
The enforcement of an unpaid parking charge notice is much worse with some of the “less reputable” companies attempting to charge “attending to remove” fees at each visit!! This abuse of the fee scale was rarely ever seen before the recession and now, we have many cases where a bailiff is attempting to charge fees in excess of £500 to enforce an unpaid parking ticket of just £120. If the debtor cannot afford to pay...their vehicle is removed and sold. Without a car, many debtors are finding it difficult to continue with their employment and with bank lending at an all time low, they are unable to borrow money to buy a replacement vehicle and this is leading to further serious debt related problems.
Approx 4 years ago HMCS awarded Contracts to 4 companies (Marston Group, Philips Collection Services, Swift Credit Services and Excel Enforcement) for the enforcement of unpaid Magistrate Court Fines. At the time, I was very critical of the fees that HMCS agreed that each company could charge the debtor which consisted of an “administration fee” of £75 followed by a “one off” figure of £200 if an “enforcement” visit was made. Recently, the fees have increased to £85 and £215. I was most critical of the “admin” fee which I had wrongly thought of a being a charge for sending a letter. In fact; this fee is to set up an account and administer and monitor a payment plan etc. However, the problem that we find with the enforcement of these unpaid court fines is the difficulty in getting a payment arrangement agreed once the case has been allocated to a bailiff for enforcement and the reason for this is because; the HMCS contracts specifically provide that from all payments made to the bailiff, the court fine must be discharged first. Therefore, if a bailiff is to agree a payment proposal over 3 months etc, he will know that he will not receive his commission until after the fine has been paid in full. Therefore, to alleviate this, it is obvious that the bailiff will have to be more “forceful” in the enforcement of the fine in order to “encourage” immediate payment in full. Naturally, this leads to a significant increase in the number of complaints being made against the bailiff. However, under the proposals this may well be resolved. I will deal with this further on.
From personal experience, the proposed fee scale is broadly what is now (wrongly) being charged by a bailiff when enforcing unpaid council tax. It is less than is currently being charged by bailiffs enforcing unpaid parking tickets and is almost identical to the recently increased fees charged by the four companies contracted by HMCS to enforce court imposed fines.
Under the fee scale it is proposed that a percentage fee be added for debts over £1,000. I am not persuaded that this should be added for domestic debts and should instead, be reserved only for businesses.
A very important point to consider with the proposed fee scale is the fee of £105 which can only be charged if seized goods have actually been sold. There is no fee proposed for attending to remove, removal or storage. This is very significant indeed because; under this proposal, there is little incentive for the bailiff to actually remove goods and instead, payment of the debt is to be encouraged. This alone, must invariably lead to a significant decrease in the level of complaints made against bailiffs.
Proportionality:I have concerns about proportionality as there will almost certainly be situations where the fees are excessive and disproportionate to the amount of the debt and this will have to be addressed by way of further discussions.
Two years ago, I made a Freedom of Information request to approx 130 local authorities and from their responses, it would seem that the average Liability Order for unpaid council tax is approx £640 and for non domestic rates is £2,440. I would estimate that the average unpaid PCN is significantly less at approx £110.
Pro Rate Payments to the creditor:One area that I am pleased to see in the Consultation is the proposal for pro rata payments to be made to the creditor. This is significant for a number of reasons. Currently, as mentioned above, the companies contracted by HMCS to enforce unpaid criminal court fines are permitted to accept a payment plan of approx 4-6 months (depending on the “warrant handling” period) but in reality, this is not favourable to the bailiff as all payments by the debtor must be allocated to clear the court fine first. Under the pro rata proposal, this will change and should lead to more payment proposals being accepted....and naturally, this should lead to a significant reduction in complaints.
With the enforcement of council tax, the pro rata proposal will almost certainly make a significant change to the way in which bailiffs are currently acting. At present, under the current fee scale, all bailiff fees can be deducted first before paying the balance to the local authority. Sadly, this is subject to the most awful abuse of the fee scale in a number of ways. For example; if a bailiff is unable to gain access into a property, we are constantly seeing cases where the bailiff will instead, “levy” upon a car that is not owned by the debtor and in doing so; charge a “levy fee” and almost always, an “enforcement fee” to the account. It is commonplace to see fees of approx £250 being charged under this highly questionable method of enforcement. Even though these fees are disputed, the bailiff company will nonetheless, retain these fees that have been collected from the debtor, and pay the balance to their local authority client. Another area of concern that we are seeing from “less reputable” companies is where a payment plan is practically at an end and where the bailiff makes a further wholly unnecessary “attending to remove” visit to the debtors premises on the basis that a payment made many months before had been one or two days late and that the debtor had therefore “apparently defaulted” on their payment agreement. It is not uncommon to see fees of £150 upwards being charged and once again, the bailiff company will retain this “disputed fee”.
Multiple warrantsThe companies under contract with HMCS to enforce unpaid criminal fines are permitted to charge an “administration fee” for each Distress Warrant that they are enforcing for the same debtor but they cannot charge “multiple fees” at the enforcement visit stage. My personal opinion is that this same situation should apply for all other debts.
Exceptional Costs:Under the Consultation MOJ are seeking views from the public to determine the need for “exceptional costs” to be charged. This is an opportunity for the public to voice their concerns at the dreadful abuse by some High Court Enforcement Companies of Paragraph 12 (Miscellaneous Fees) under the High Court Enforcement Officers Regulations 2004. This must come to an end and instead, “exceptional costs” should mean exceptional and furthermore, there should be a requirement that an application be made to the court in each and every case where an “exceptional cost” is required.
Inflation:I do not agree with the proposal that the fee structure should be updated annually. With arrears of council tax, it should be remembered that the debtor will incur a summons cost of approx £95 before the debt is passed to a bailiff to enforce and with non domestic rates the figure is approx £250. The proposed bailiff fee will add a further sum of either £75 or £305 (if an enforcement visit is made). If bailiff fees were increased by approx 10% per annum this would mean that the fee scale would significantly increase by the 3rd year to over £100 for the administration stage and £316 at the enforcement stage. It is my understanding that the fee scale under the HMCS Contracts for the enforcement of court fines was reviewed after 3 years and the level of fees increased by approx 15%. This same fee review should apply under this proposal.
Proposed fee scale for High Court Enforcement:Sadly, I believe that there has been insufficient research done on the level of proposed fees for enforcing judgements that are transferred to the High Court for enforcement. Under the proposal, if a sale proceeds a fee of £510 can be charged. This figure is 5 times as great as that being proposed for all other debts. How this can be justified I do not know...and the most obvious area of concern will be that HCEO’s would have a significant financial incentive to remove and sell goods. This cannot be right.
On the bailiff section of the Consumer Action Group forum there has been a significant increase in the number of complaints made against High Court enforcement companies in particular; relating to the level of fees being charged. By way of example; a few weeks ago, a debtor posted details on the forum of a case where a certain HCEO company charged fees of approx £5,000 for enforcing a CCJ of approx £2,500. Interestingly, the bailiff had valued the levied goods at just £300!! Of serious concern is that one year after receiving notification from the enforcement company that the account had been settled in full, the debtor is unable to obtain a Certificate of Satisfaction. It would seem that the High Court Enforcement Company have not as yet paid over to the creditor the full amount required to clear the judgement and interest.
Chapter 9: High Court and County Court Jurisdiction: Question 54.At present, all county court judgements under £600 may only be enforced by a county court bailiff and the amount of the judgement increases by £100 if the creditor requests a warrant. Judgements over £600 can be “transferred up” for a High Court Enforcement Officer (HCEO) to enforce. The consultation paper is seeking views on whether all judgements...irrespective of the value....should be enforced by an HCEO. Personally, I am very much against this proposal and it is important to note that if the proposed fee scale for high court debts is imposed, this would add a fee of not less than £750 to a CCJ of just £100. If a debtor is unable to afford to pay £100 to avoid a judgement being registered again him, I cannot see how it could be possible for him or her to raise a sum of 7 times this figure. My personal opinion is that enforcement by way of the High Court should be reserved for significant judgements of not less than £5,000.
Consultation Paper on Bailiff Reform.
In this particular Newsletter, I will be addressing Chapter 5 and Chapter 9 of the Consultation paper on bailiff reform.
Chapter 5: Costs of Enforcement Related Services: Questions 33-45Any increase in the statutory fee will not be welcome by debtors or indeed the advice sector. At present, there is a completely different statutory fee scale for the collection of unpaid council tax, parking charge notices, criminal fines imposed by the magistrate’s court and child support agency arrears. This is complete and utter nonsense and MOJ are hoping to overcome this by introducing a set fee scale.
If this Consultation had been issued 2 or 3 years ago, I would very likely have been highly critical of the proposed fee scale. However, in the past year since this awful recession has impacted on the vast majority of individuals, it is sadly the case that many bailiff companies are routinely “interpreting” the fee scale in a way that never used to happen. As an example, it is fast becoming “commonplace” for a bailiff to charge an “enforcement fee” of approx £150-£250 (or even more) when making an initial visit to a property to enforce a Liability Order for unpaid council tax. There is of course no provision within the current statutory fee scale for an “enforcement fee” and, in reality, this is really an “attending to remove fee” which should not be charged unless a prior valid levy had been made on the debtor’s goods.
The enforcement of an unpaid parking charge notice is much worse with some of the “less reputable” companies attempting to charge “attending to remove” fees at each visit!! This abuse of the fee scale was rarely ever seen before the recession and now, we have many cases where a bailiff is attempting to charge fees in excess of £500 to enforce an unpaid parking ticket of just £120. If the debtor cannot afford to pay...their vehicle is removed and sold. Without a car, many debtors are finding it difficult to continue with their employment and with bank lending at an all time low, they are unable to borrow money to buy a replacement vehicle and this is leading to further serious debt related problems.
Approx 4 years ago HMCS awarded Contracts to 4 companies (Marston Group, Philips Collection Services, Swift Credit Services and Excel Enforcement) for the enforcement of unpaid Magistrate Court Fines. At the time, I was very critical of the fees that HMCS agreed that each company could charge the debtor which consisted of an “administration fee” of £75 followed by a “one off” figure of £200 if an “enforcement” visit was made. Recently, the fees have increased to £85 and £215. I was most critical of the “admin” fee which I had wrongly thought of a being a charge for sending a letter. In fact; this fee is to set up an account and administer and monitor a payment plan etc. However, the problem that we find with the enforcement of these unpaid court fines is the difficulty in getting a payment arrangement agreed once the case has been allocated to a bailiff for enforcement and the reason for this is because; the HMCS contracts specifically provide that from all payments made to the bailiff, the court fine must be discharged first. Therefore, if a bailiff is to agree a payment proposal over 3 months etc, he will know that he will not receive his commission until after the fine has been paid in full. Therefore, to alleviate this, it is obvious that the bailiff will have to be more “forceful” in the enforcement of the fine in order to “encourage” immediate payment in full. Naturally, this leads to a significant increase in the number of complaints being made against the bailiff. However, under the proposals this may well be resolved. I will deal with this further on.
From personal experience, the proposed fee scale is broadly what is now (wrongly) being charged by a bailiff when enforcing unpaid council tax. It is less than is currently being charged by bailiffs enforcing unpaid parking tickets and is almost identical to the recently increased fees charged by the four companies contracted by HMCS to enforce court imposed fines.
Under the fee scale it is proposed that a percentage fee be added for debts over £1,000. I am not persuaded that this should be added for domestic debts and should instead, be reserved only for businesses.
A very important point to consider with the proposed fee scale is the fee of £105 which can only be charged if seized goods have actually been sold. There is no fee proposed for attending to remove, removal or storage. This is very significant indeed because; under this proposal, there is little incentive for the bailiff to actually remove goods and instead, payment of the debt is to be encouraged. This alone, must invariably lead to a significant decrease in the level of complaints made against bailiffs.
Proportionality:I have concerns about proportionality as there will almost certainly be situations where the fees are excessive and disproportionate to the amount of the debt and this will have to be addressed by way of further discussions.
Two years ago, I made a Freedom of Information request to approx 130 local authorities and from their responses, it would seem that the average Liability Order for unpaid council tax is approx £640 and for non domestic rates is £2,440. I would estimate that the average unpaid PCN is significantly less at approx £110.
Pro Rate Payments to the creditor:One area that I am pleased to see in the Consultation is the proposal for pro rata payments to be made to the creditor. This is significant for a number of reasons. Currently, as mentioned above, the companies contracted by HMCS to enforce unpaid criminal court fines are permitted to accept a payment plan of approx 4-6 months (depending on the “warrant handling” period) but in reality, this is not favourable to the bailiff as all payments by the debtor must be allocated to clear the court fine first. Under the pro rata proposal, this will change and should lead to more payment proposals being accepted....and naturally, this should lead to a significant reduction in complaints.
With the enforcement of council tax, the pro rata proposal will almost certainly make a significant change to the way in which bailiffs are currently acting. At present, under the current fee scale, all bailiff fees can be deducted first before paying the balance to the local authority. Sadly, this is subject to the most awful abuse of the fee scale in a number of ways. For example; if a bailiff is unable to gain access into a property, we are constantly seeing cases where the bailiff will instead, “levy” upon a car that is not owned by the debtor and in doing so; charge a “levy fee” and almost always, an “enforcement fee” to the account. It is commonplace to see fees of approx £250 being charged under this highly questionable method of enforcement. Even though these fees are disputed, the bailiff company will nonetheless, retain these fees that have been collected from the debtor, and pay the balance to their local authority client. Another area of concern that we are seeing from “less reputable” companies is where a payment plan is practically at an end and where the bailiff makes a further wholly unnecessary “attending to remove” visit to the debtors premises on the basis that a payment made many months before had been one or two days late and that the debtor had therefore “apparently defaulted” on their payment agreement. It is not uncommon to see fees of £150 upwards being charged and once again, the bailiff company will retain this “disputed fee”.
Multiple warrantsThe companies under contract with HMCS to enforce unpaid criminal fines are permitted to charge an “administration fee” for each Distress Warrant that they are enforcing for the same debtor but they cannot charge “multiple fees” at the enforcement visit stage. My personal opinion is that this same situation should apply for all other debts.
Exceptional Costs:Under the Consultation MOJ are seeking views from the public to determine the need for “exceptional costs” to be charged. This is an opportunity for the public to voice their concerns at the dreadful abuse by some High Court Enforcement Companies of Paragraph 12 (Miscellaneous Fees) under the High Court Enforcement Officers Regulations 2004. This must come to an end and instead, “exceptional costs” should mean exceptional and furthermore, there should be a requirement that an application be made to the court in each and every case where an “exceptional cost” is required.
Inflation:I do not agree with the proposal that the fee structure should be updated annually. With arrears of council tax, it should be remembered that the debtor will incur a summons cost of approx £95 before the debt is passed to a bailiff to enforce and with non domestic rates the figure is approx £250. The proposed bailiff fee will add a further sum of either £75 or £305 (if an enforcement visit is made). If bailiff fees were increased by approx 10% per annum this would mean that the fee scale would significantly increase by the 3rd year to over £100 for the administration stage and £316 at the enforcement stage. It is my understanding that the fee scale under the HMCS Contracts for the enforcement of court fines was reviewed after 3 years and the level of fees increased by approx 15%. This same fee review should apply under this proposal.
Proposed fee scale for High Court Enforcement:Sadly, I believe that there has been insufficient research done on the level of proposed fees for enforcing judgements that are transferred to the High Court for enforcement. Under the proposal, if a sale proceeds a fee of £510 can be charged. This figure is 5 times as great as that being proposed for all other debts. How this can be justified I do not know...and the most obvious area of concern will be that HCEO’s would have a significant financial incentive to remove and sell goods. This cannot be right.
On the bailiff section of the Consumer Action Group forum there has been a significant increase in the number of complaints made against High Court enforcement companies in particular; relating to the level of fees being charged. By way of example; a few weeks ago, a debtor posted details on the forum of a case where a certain HCEO company charged fees of approx £5,000 for enforcing a CCJ of approx £2,500. Interestingly, the bailiff had valued the levied goods at just £300!! Of serious concern is that one year after receiving notification from the enforcement company that the account had been settled in full, the debtor is unable to obtain a Certificate of Satisfaction. It would seem that the High Court Enforcement Company have not as yet paid over to the creditor the full amount required to clear the judgement and interest.
Chapter 9: High Court and County Court Jurisdiction: Question 54.At present, all county court judgements under £600 may only be enforced by a county court bailiff and the amount of the judgement increases by £100 if the creditor requests a warrant. Judgements over £600 can be “transferred up” for a High Court Enforcement Officer (HCEO) to enforce. The consultation paper is seeking views on whether all judgements...irrespective of the value....should be enforced by an HCEO. Personally, I am very much against this proposal and it is important to note that if the proposed fee scale for high court debts is imposed, this would add a fee of not less than £750 to a CCJ of just £100. If a debtor is unable to afford to pay £100 to avoid a judgement being registered again him, I cannot see how it could be possible for him or her to raise a sum of 7 times this figure. My personal opinion is that enforcement by way of the High Court should be reserved for significant judgements of not less than £5,000.
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