Debt collection: Time for freedom of choice



Freedom of choice is something we all take for granted. Yet today, thousands of UK businesses, individuals and organisations are unable to recover millions of pounds owed to them because they do not have a choice over how their judgments are enforced.

Judgments for debts below £600 and all debt from Consumer Credit Act-regulated agreements must be enforced using the county court bailiff system. Judgments for non-regulated debt over £600 can be transferred up from the county court to the High Court for enforcement.

The High Court Enforcement Officers Association (HCEOA) has been campaigning for some time for a change in the High Court and County Courts Jurisdiction Order 1991 to allow court users the freedom to choose a High Court enforcement officer (HCEO) to enforce their judgments.

We have proposed that the fees that HCEOs charge for collecting debts under £600 should match the non-High Court fee scale for debts of the same amount – they would be 100% in line with the current system.

This change is backed by the Civil Court Users Association and would be a positive step, allowing creditors and their representatives the ability to make an informed choice about how and when their debt is recovered.

A more effective service

In the fourth quarter of 2023, figures released by Registry Trust revealed a staggering £502m total value of judgments across all British Isles jurisdictions, marking a 19% year-on-year increase. In addition, within England and Wales, the total number of judgments rose by 16%.

Amid ongoing cost-of-living challenges, these figures are likely to increase. This highlights the need for an enforcement system that is flexible and sympathetic to the needs of creditors and debtors alike.

Changing the jurisdiction order to allow HCEOs to enforce lower-value debt would mean a more effective and responsive service with improvements in communications, payment arrangement handling and reporting, leading to improved and quicker collections.

This will provide relief to county courts by helping to clear the backlog of cases and freeing up resources to give customers who want to continue using the county court service every option to do so, with no cost to the taxpayer.

Although £600 might not sound like a great deal, for a small business or a creditor owed multiple, smaller debts over longer periods of time, it soon adds up. The result can be detrimental to cashflow, leading to either price increases for customers or the organisation having to borrow to cover shortfalls in income. This puts them at risk of becoming the debtors of tomorrow.

Ongoing call for change

In 2022, almost 400 landlords, solicitors, debt collection agencies, in-house legal recoveries teams and claimants in person took the time to voice their concerns in our ‘Supporting Court Users’ survey. The results show that many businesses and individuals are continuing to simply write off money rather than dealing with a process which does not meet their needs.

The results show that:

  • 97% of court users would like the freedom to choose between a HCEO and county court bailiff to enforce their unregulated judgments under £600;
  • 93% of court users support a further change allowing HCEOs to collect debts arising from Consumer Credit Act-regulated agreements; and
  • 45% of court users would issue more judgments.

This appetite for change is not new. We carried out a similar survey in 2015, in which 88% of court users supported an amendment to the legislation, and again in 2021 with 99% in favour. However, nothing has changed.

If the amendment was made, we do not think it would lead to all court users rushing to use High Court enforcement. But it would give people and businesses another option and, more importantly, the freedom to choose, as well as actually benefiting the county court system.

Time for freedom of choice

The High Court enforcement profession is ready, willing and able to support this change. We urge the government to take action now and support the thousands of court users who would benefit.

The Ministry of Justice could make this change today. All it needs is action. This year we will be reaching out to more organisations to gain their backing. We are asking solicitors and practitioners to call on their professional bodies to support court users and make 2024 the year of freedom of choice.

 



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