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.
The Money Advice Trust is disappointed to see:
- 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.