Proposed changes to the law governing bailiffs may change the way consumer debt is pursued, particularly amendments to High Court and County Court Jurisdiction Orders.
While law firm Wright Hassall, which operates a car-finance recoveries service, has welcomed the changes as promoting better ethics among debt collection agencies, Adam Wonnacott, sales director at motor finance debt collection agency the Burlington Group, suggested that the government response to the recent consultation contained a ‘significant opportunity’ for consumer lenders to capitalise on proposals to allow creditors increased freedom when enforcing monetary judgments.
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Although the majority of the response to the consultation did not apply to recoveries by car finance companies directly, said Wonnacott, "the recommendation within the government response to the consultation to consider amending the High Court and County Court Jurisdiction Order is of critical significance to the consumer finance industry, and if change were effected it would almost certainly revolutionise the way in which consumer lenders collect their debt."
Enforcing judgements
According to Wonnacott, writing in this issue of Motor Finance (see page 17), the government proposals pertaining to a possible change in the High Court and County Court Jurisdiction Order may allow lenders to employ High Court Enforcement Officers to enforce judgments by entering into payment arrangements secured upon the assets of the judgment debtor.
Wonnacott added a change in the law would allow creditors to benefit from the same enforcement methods as are being used by local authorities, HM Revenue and Customs and utilities suppliers. Wonnacott had said this was a possibility during the round of government consultation over changes to bailiff legislation in early 2012.
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By GlobalDataSpeaking in February that year, Wonnacott said: "In practice many creditors have effectively discounted the use of County Court bailiff warrants of execution as a collection method.
"Permitting private High Court Enforcement service providers to enforce this type of [CCA-regulated] debt will give the creditor much more choice and will allow them to shop around for the best service."
The government’s attempt to tackle aggressive bailiff behaviour, in response to the Ministry of Justice consultation Transforming Bailiff Action, will include banning debt collectors from physical contact with debtors and entering properties at night or where only children are present. National press coverage of the proposals has also focused on their application to the collection of rent arrears.
Sarah Perry, partner at Wright Hassall’s dispute resolution team said protection of people from aggressive bailiffs was a step toward ending "unethical practice" in the industry. Perry added the proposals included a new model by which collection agencies’ fees would be calculated.
In particular, Perry’s welcoming of improved choice of agency and the scope for agents to raise their professional reputations echoed the view of Claire Selvidge, business manager at debt collector Anglia UK. Selvidge noted in her address to the Finance & Leasing Association Annual Motor Finance Convention in November that repossession agents were "an extension" of the lender which employed their services. As such, debt collectors should be FLA members, adhering to the association’s codes of conduct regarding collections, which set a benchmark for consumer confidence and verification of agents.
Full comment, Sarah Perry, Wright Hassall:
The Ministry of Justice announcement to protect vulnerable people from aggressive bailiffs is to be welcomed.
It is the unethical practice of the minority and the horror stories which quite rightly attract media attention which has driven the
announcement from Justice Minister, Helen Grant.
For most bailiffs, the new laws are nothing more than the adoption of good ethical practices. The new laws will ban bailiffs from entering homes at night or when only children are present and new safeguards will quite properly prevent them from using force against those who owe money .Bailiffs’ fees will be based on new set costs which are to be introduced.
Other areas of proposed reform include:
– Mandatory training and a new certification process for bailiffs.
– New rules on recovering rent arrears.
– Regulations detailing when a bailiff can enter a property, what a bailiff can take and their charges.
– Ensuring vulnerable people get assistance and advice.
When it becomes necessary to repossess assets under a finance agreement, who is instructed and how they behave is critical to the reputation of our clients. This increased regulation is to be welcomed by all.
richard.brown@timetric.com
