New rules for bailiffs

​On 6th April a new set of rules governing bailiff behaviour comes into force. Bailiffs are used to collect a range of debts. Most commonly they are used by local authorities to collect council tax, parking charges and business rates. Over recent years the use of bailiffs has become a common occurrence on our streets. Last year, local authorities referred debts to bailiffs 1.8 million times.

Debt advice charity the Money Advice Trust welcomes some of the new rules but has deep concerns that many problems have not been resolved and some may be exacerbated by the new rules.

Joanna Elson, Chief Executive of the Money Advice Trust, said:

“We were pleased to see a commitment to prevent bad bailiff practices in the Coalition Agreement published in 2010, and we welcome the decision to implement new rules four years later. Some of the rules will have a positive effect, such as requiring that people are directed to sources of free debt advice in prescribed forms and notices.

“However, an opportunity to more thoroughly reform the industry has been missed. The point of bailiffs is to provide a method of collecting money from people who refuse to pay their debts – whereby the threat of losing possessions or the actual removal of possessions leads to debt repayment. The fees for using bailiffs are charged to the person in debt and collected by the bailiff on top of the original debt – this means the fees chargeable by bailiffs can incentivise bad practice and we are concerned the new fee structure does little to prevent this.

“The proposed new fee structure offers some benefits, especially in terms of transparency by providing a single set of rules covering bailiff powers; but it also incentivises bailiffs to escalate matters quickly without seeking early resolution of the debt. Bailiffs can charge £75 during what is called the ‘compliance stage’ – just for informing the person in debt that they are now seeking to collect money through enforcement procedures. But they can then charge £235 at the ‘enforcement stage’ – for visiting a property and a further fee for eventually selling goods. The incentive to escalate to the ‘enforcement stage’ is clear.  We want to see firm guidance in place to make sure this does not happen.

“Getting bailiff regulation right is crucially important. We believe such a large industry with a history of bad practice needs a proper independent regulator, and we were disappointed not to see this in the new rules. We’ve helped thousands of people deal with bailiffs and we’ve seen the corrosive effect this collection method can have on households. We know that there is real appetite for change and improvement in the sector and in Government – but it is far from clear that these new rules will deliver the significant level of improvement required in the bailiff industry.”

A breakdown of some of the new rules

The Money Advice Trust welcomes: 

• A single set of regulations governing bailiffs which should help simplify a very complex industry - though more could be done here (see below).
• A simple straightforward fees regime that applies across all enforcement agents (though there are unnecessary exceptions for High Court enforcement).
• The Notice of enforcement giving 7 days’ notice of action in all cases.
• Prescribed forms and notices with a clear message for people to seek free debt advice.
• A more comprehensive list of exempt goods.
• The simpler procedure for people to complain through the courts about individual bailiffs in order to dispute their fitness to hold a certificate.
• A more rigorous training regime for enforcement agents– the Money Advice Trust and the Royal College of Psychiatrists will be rolling out training to bailiffs on debt and vulnerability.
• We are pleased that Government is committed to a robust review process to see what impact the reforms have had, particularly on the vulnerable.

• No independent regulator to monitor the industry.
• No simple procedure to suspend enforcement action, and prevent costly fees where there are mitigating circumstances.
• A fee structure which provides an incentive to bypass the compliance stage (requirements were not built into the regulations for bailiffs to do more than serve the notice of enforcement).
• No free and simple procedure for complaining about bailiff companies.
• A separate fee regime for High Court enforcement with more stages and higher fees.
• Section 27 of the Domestic Violence, Crime & Victims Act will NOT be repealed so magistrates’ court fine bailiffs and those appointed by HMRC still have power of forcible entry from the start. This undermines other moves towards simplification.   
• No statutory definition of vulnerability, meaning rules to offer remission for bailiff fees charged to ‘vulnerable people’ may be impossible to enforce.  We hope that revised and strengthened National Standards for Enforcement Agents will be in place as soon as possible to help identify and deal with vulnerable people.
• No rule to make sure debts owed by people identified as vulnerable should be passed back automatically to the initial creditor.