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 33-45
Any 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 warrants
The
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.
To conclude:
Once again, this Consultation is of vital
importance.
Consumer Action Group intends to respond
formally to the consultation paper in May and in doing so will be taking into
consideration comments made by the public on the forum.
We would therefore urge you to visit
the links below:
Thank you for taking the time to read
this Newsletter.
Tomtubby
There is a
new
forum to discuss the consultation paper and at present, there six sub-forums
as follows:
There will not be another opportunity to have good
bailiff law and to protect vulnerable debtors from aggressive bailiffs and this
consultation will give the public the opportunity to influence change.
You can submit your own response
to the consultation on-line HERE
If
you want more help, advice or even just some moral support then come to The
Consumer Action Group website where we offer help on pretty well every
consumer problem COMPLETELY FREE.
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