Bailiffs: Enforcement of debt: Government Response to the Justice Committee’s Seventeenth Report of Session 2017–2019
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Contents — Fifth Special Report — Appendix 1: Letter from Lord
Bellamy KC to Sir Bob Neill MP — Appendix 2: Government Response —
Footnotes Fifth Special Report The Justice Committee published its
Seventeenth Report of session 2017–2019, Bailiffs Enforcement of
Debt (HC 1836), on 11 Apr 2019. The Government’s Response and a
covering letter were received on 13 December 2022 and are appended
to this...Request free trial
Contents
Fifth Special Report The Justice Committee published its Seventeenth Report of session 2017–2019, Bailiffs Enforcement of Debt (HC 1836), on 11 Apr 2019. The Government’s Response and a covering letter were received on 13 December 2022 and are appended to this report. Appendix 1: Letter from Lord Bellamy KC to Sir Bob Neill MP Dear Sir Bob, Please find enclosed the Government’s response your committee’s seventeenth report of Session 2017–2019: Bailiffs: Enforcement of debt. I would like to thank the committee for its report on this important matter and to apologise for the lengthy delay in providing this response. This delay has largely been because of the need to divert resources in this area to respond to the Covid-19 pandemic. The government has today published on gov.uk our response to our call for evidence about the 2014 enforcement agent reforms. Kind regards,
Lord Bellamy KC Appendix 2: Government Response Introduction 1. The Government welcomes the Justice Committee’s 17th Report of Session on Bailiffs:1 Enforcement of debt. We are grateful to Committee for conducting an inquiry into this important issue. This document sets out the Government’s response to the Committee’s recommendations. We sincerely apologise for the lengthy delay in providing a substantive response to the Committee’s Report. In July 2019, the former Secretary of State for Justice set out in a Written Ministerial Statement2 that we needed more time to provide a final response in order to engage further with stakeholders about the recommendations. Unfortunately, the global Covid-19 pandemic and the Government response to it has led to this response and the response to our own call for evidence3 on this matter being published significantly later than originally envisaged. 2. The pandemic has had a significant impact on the work of enforcement agents, both in terms of the volumes of cases that they have dealt with, due to restrictions on the use of the Taking Control of Goods Regulations, court closures and changes to creditor behaviour, and the need for enforcement agents to work in a Covid-secure way. The current pressures on living costs will also have an impact on the enforcement of debt. Our call for evidence, therefore, provides a snapshot of the impact that the Taking Control of Goods Regulations had had at that time. However, the findings continue to be relevant and will be used to inform the development of further reform in this area. 3. The Government remains committed to ensuring that all enforcement agents treat people in debt fairly and operate in a responsible and proportionate way. We also recognise that the enforcement of debt is necessary for both the economy and the justice system and that enforcement agents carry out a difficult role in often challenging circumstances. 4. The Committee’s inquiry was carried out in response to concerns about a rise in complaints about the behaviour of enforcement agents recorded by debt advice charities. Members of Parliament had also raised concerns about people they had met in their constituency surgeries who reported bad experiences with enforcement agents who had visited their homes. A Westminster Hall debate on bailiff regulatory reform took place on 9 January 2019, during which MPs gave examples of poor enforcement agent behaviour. 5. The Committee’s inquiry focussed on assessing: the impact of the 2014 enforcement agent reforms; why there had been an increase in complaints; whether the fee structure was working to encourage settlement at an earlier stage; and whether the system of self-regulation was working as intended, and if not, whether enforcement agents should be regulated by an independent regulator. 6. The Ministry of Justice held a call for evidence from 25 November 2018 to 17 February 2019 to inform our second post implementation review of the 2014 enforcement agent reforms introduced by the Tribunals, Courts and Enforcement Act 2007. The call for evidence sought views on the following issues:
7. We received nearly 300 responses, including from representatives from the enforcement industry, the advice sector, users of enforcement services including local authorities, the judiciary and private individuals. We also conducted a separate exercise to collect evidence from the Civil Enforcement Association (CIVEA) and the High Court Enforcement Officers Association (HCEOA) about debt recovery rates. 8. The Written Ministerial Statement published in July 2019 contained a commitment to implement the Committee’s recommendation that body-worn video cameras should be made mandatory for privately employed enforcement agents. It also committed to considering wider reform, including improving the independence and effectiveness of the complaints system and strengthening regulation of enforcement agents. The statement thanked the Committee for its report and said that we would respond in full alongside the publication of our response to the call for evidence, following further engagement with stakeholders. As set out above, our final responses have been considerably delayed as a result of the Government’s response to the pandemic. However, we are pleased now to be able to respond to both the Committee’s report and our call for evidence. 9. A key development since 2019 has been the establishment of the Enforcement Conduct Board (ECB). This independent oversight body was developed by a working group of representatives from the enforcement and debt advice sectors, chaired by the Centre for Social Justice. The Ministry of Justice strongly supports its launch and believes that it can make a real difference in protecting the vulnerable and driving up standards, while improving the effectiveness of enforcement. We have committed to undertake a review of the ECB within two years to see if it is necessary to place it on a statutory footing. Response to recommendations Complaints 10. The Committee reached the following conclusions: Complaints are important and must be investigated properly and learned from – they should be encouraged. But the existing complaints process is fragmented and hard to navigate. This is especially problematic given that debtors are more likely to be vulnerable and dealing with multiple difficulties in their lives, such as ill health or unemployment. (Paragraph 38) There is a gulf between the reports by debt advice charities about numbers of complaints and the reports by bailiff companies, industry associations and the LGSCO. While there may be many reasons for this, we conclude that a more clearly defined and independent complaints process would give important reassurance that all complaints will be fairly and properly investigated. It would also enable much greater transparency about real numbers of justified complaints.(Paragraph 39) 11. The Government’s call for evidence sought views on how the current complaints system is working, including whether people were choosing to make complaints, how they found out how to do so and whether they were happy with the results. Our analysis of the responses supports the Committee’s conclusions, although there were differing views. The headline findings are summarised below, and further detail is available in the Government’s published response to the call for evidence. 12. The call for evidence indicated a large disparity between the number of complaints reported by the advice sector and the number of formal complaints received by the industry, the LGSCO and the courts. Data submitted by the enforcement industry indicated that the volume of complaints made about enforcement agents is much lower than would be expected relative to the volume of debts enforced and compared to similar industries. However, from the available evidence it is very difficult to assess whether the low number of formal complaints is due to a lack of widespread problems with enforcement agent behaviour, or because people are reluctant to make a formal complaint. 13. Responses from individuals and from the debt advice sector indicated a number of barriers which deter people from making complaints: many people do not know they have a right to complain; the process is confusing with multiple routes to making a complaint; complaining to the same organisation or individual that has been acting inappropriately or to their trade association is unattractive as the process will be perceived to be weighted in favour of the enforcement agent; making a complaint is time consuming and stressful and there are few available sanctions. Debt advisors said that as making a complaint does not halt the enforcement action, their priority is to limit the impact of the enforcement action rather than pursue a complaint. Individuals who had made a complaint were not generally satisfied with the outcome. 14. Responses from the enforcement industry indicated that complaints are low for different reasons: firms had expanded their customer care teams and were resolving complaints satisfactorily at first contact; the rules are very prescriptive, which makes it easier to identify a breach of regulations; the introduction of a compliance stage means many payments are generated without sending an agent; and speculative complaints are being deterred due to the rigour in the complaints process and the use of body-worn video cameras. 15. The trade association CIVEA, has subsequently amended its complaints process in response to concerns that their complaints system lacked independence. From 1 June 2019, CIVEA passed responsibility for adjudicating complaints related to local authority or Transport for London debts to the LGSCO. It has also established an independent Compliance, Adjudication and Review of Enforcement Panel to review escalated complaints relating to other types of debts. 16. The Government’s view is that formal complaints are not a reliable indicator of the prevalence of problems in the industry due to the evidence of barriers in the complaints system, including the fact that it is fragmented and complex to navigate. We agree with the Committee’s conclusion that a more clearly defined and independent complaints process is important both in ensuring complaints are handled fairly and in improving transparency around problems in the sector. 17. The Committee made the following recommendations: Recommendation 1: We recommend that there should be an independent complaints body, to which all complaints about bailiffs should be escalated if the complainant has exhausted local complaints procedures (for example those of the organisation for which the bailiff was working). The complaints process should be very clearly set out and have as few levels as possible so that it is easy to navigate. (Paragraph 43) Recommendation 2: We recommend that the MoJ should, when deciding where to site the independent complaints function, take full account of the existing role of the Local Government and Social Care Ombudsman. It is particularly important as the Ombudsman has the ability to investigate how both the local authority and the enforcement agent acted, in order to ascertain where any fault may lie. (Paragraph 50) Recommendation 3: The MoJ must also take into account the opportunities afforded by the planned Public Service Ombudsman. However, we are concerned about the delay in introducing the legislation required to implement the Government proposals for this body. We add our voice to that of the Public Administration and Constitutional Affairs Committee in recommending that the Government should invite the House of Lords to join the House of Commons in setting up a joint committee to conduct pre-legislative scrutiny of the draft Public Service Ombudsman Bill as soon as possible. (Paragraph 51) 18. The Government agrees, in principle, with the first recommendation that it should be possible for all complaints escalated beyond local complaints procedures to be escalated to an independent body. We note the Committee’s second recommendation and agree that the LGSCO plays an important role in holding both enforcement agents and creditors to account. 19. One of the ECB’s key objectives will be to ensure public confidence in an accessible and independent complaint-handling system. In addition to supporting the establishment of the ECB and committing to review within two years whether it is necessary to legislate to place its work on a statutory footing, the MoJ intends to take forward one legislative reform now regarding the sanctions that can be imposed upon High Court Enforcement Officers (HCEOs). Currently, complaints about an HCEO can be made to their trade association - the HCEOA, who can levy fines against its members. In cases of egregious rule breaking, the Senior Master of the Queen’s Bench Division in the High Court4 has the power to remove an HCEO’s authorisation. We intend to consult on extending the range of sanctions that are available to the Senior Master to sanction rule breaking by HCEOs in cases where rules have been broken but for which it would not be justified to remove their authority to act as an HCEO. 20. The Government also notes the Committee’s concern that the information available to the public on the Government’s website did not fully explain how to complain about an enforcement agent, including the role of the LGSCO, the correct sequence for escalation, and the ability to complain to a court (paragraph 25). In August 2020, changes were made to the information on GOV.UK5 to improve the information about how to make a complaint against an enforcement agent. Regulation 21. The Committee reached the following conclusions: We are surprised that bailiffs are apparently so under-regulated compared with other sectors, especially given that they deal with some of the most vulnerable people in society. It does not make sense for enforcement to be regulated only through the rubber-stamping of individuals through a court certification process. In our view, it would increase the reputation of the sector to have much stronger regulation. (Paragraph 63) Having said that, the enforcement industry is relatively small: about 2,500 civil enforcement agents and just over 40 High Court Enforcement Officers are registered with the MoJ. It is important that any new regulation function should be proportionate and not over burdensome, so as to reduce costs which might be passed on to the public purse. (Paragraph 64) 22. The Government’s call for evidence asked whether the current level of regulation of the enforcement industry is sufficient, whether there should be an independent regulator and if so, what powers, scope and structure this should take and how should it be funded. 23. The call for evidence received mixed views on the adequacy of the current level of regulation. About a quarter of respondents thought that it was sufficient and just under half of respondents said that it was not. The remainder did not give a view. The headline findings are summarised below, and further detail is available in the Government’s published response to the call for evidence. 24. The advice sector, some private individuals and a small number of creditors and enforcement agents considered that there was a need for independent regulation of the sector. The advice sector said that the 2014 reforms failed to protect vulnerable people and that enforcement agents were “breaking the rules on a massive scale”. They said that the sector was under-regulated and argued that market failures in the current system (including the fact that the debtor does not choose the enforcement agent or firm used and the current system of financial incentives) could only be fixed through independent regulation of agents and firms. Many respondents linked their support for independent regulation to the need for effective management of complaints and sanctions, citing the high levels of reported dissatisfaction with enforcement agent behaviour and the lack of independence in the current complaints system as key problems. 25. There was a diversity of views within the enforcement industry itself regarding the need for further regulation. Some were supportive of strengthening regulation. Others thought that the sector was regulated effectively through its clients and the courts and the need to comply with a detailed and prescribed regulatory process. It was noted that the 2014 reforms had improved matters by reducing the number of doorstep visits through the introduction of a compliance stage. There were concerns that any extra costs for enforcement firms for further regulation could risk a decrease in investment and standards without a corresponding increase in fees. It was, however, generally recognised that there were areas of the current rules which are open to interpretation. 26. The call for evidence received responses suggesting alternative ways of improving the regulation of enforcement agents, including forms of enhanced industry self-regulation such as extending the role of the trade associations and introducing an industry-wide Independent Advisory Group. 27. The call for evidence sought views on the certification process and training requirements for enforcement agents. Some enforcement firms reported that the certification regulations had improved the application process, particularly the introduction of regional courts which means that firms liaise with the same administrative teams. However, it was suggested that the Regulations could be made clearer to ensure more consistency. A wide range of respondents suggested that the training requirements should be enhanced, around understanding vulnerability and managing conflict. 28. Whilst we acknowledge that there are concerns about the certification process, we do not accept that it is a “rubber-stamping exercise”. Civil enforcement agents are required to appear in front of a judge every two years to provide the court with evidence demonstrating that they meet the requirements set out in the Certification of Enforcement Agent Regulations 2014. A small number of respondents to our call for evidence thought that the requirements are too onerous. 29. As part of our future review of the operation of the ECB, we will consider whether it is necessary to make any legislative amendments to strengthen the statutory certification and training requirements. 30. The Committee made the following recommendation: Recommendation 4: We recommend that the Government establish a regulator for the enforcement agent industry, separate to the complaints body. The regulator should be able to stop unfit enforcement agents and companies from practising. It should have the power to set intermediate sanctions such as fines for poor behaviour. An appeal mechanism should be built in. This regulator should also work to change culture and raise standards (for example, by dissemination of good practice, owning and updating the National Standards, and supporting continuing professional development). It should work closely with the complaints body, for example, sharing information about good practice. The Ministry of Justice should consult widely on where this regulatory responsibility should sit, whether in an existing body or a new body, and how it should be funded.(Paragraph 65) 31. The Government agrees with the Committee’s view that there is a need for increased regulation of the enforcement industry. In the Ministry of Justice’s interim response to the Justice Committee’s report in July 2019, the then Secretary of State for Justice said: “We believe that regulation of this sector could be strengthened but we do not yet have a firm view on the form this should take. It is an issue that would benefit from further discussions with stakeholders. We are clear that any further regulation must be effective, proportionate and sustainable.” 32. The ECB will act as an independent oversight body. In July 2021, the Centre for Social Justice published a report called “Taking Control for Good: Introducing the Enforcement Conduct Authority”6 which set out a proposed framework for this body, which had been agreed by representatives from the enforcement and debt advice sectors. The ECB has since been established. Its key objectives will be to establish clear standards of behaviour for the enforcement industry; improve accountability, including introducing effective sanctions for non-compliance; ensure public confidence in an accessible and independent complaint-handling system; and to protect vulnerable people. The Centre for Social Justice’s report set out that the ECB will be funded by firms on a pro rata basis. 33. We acknowledge that some stakeholders would prefer us to legislate now to make all enforcement firms subject to independent regulation by the ECB. Given the involvement that the industry has had in the development of the ECB and the commitment given in the Centre for Social Justice’s report for firms to fund it on a pro rata basis, we do not think that it is necessary at this stage to legislate. However, as set out above, the Government will review the operation of the ECB within two years and will consider then whether legislative changes are needed in order to ensure appropriate oversight of enforcement agents and firms. Fees 34. The Committee reached the following conclusion: We welcome the MoJ’s work to evaluate debt recovery rates, since it is important that as much debt as possible is collected without expensive bailiff visits or the pain of the seizure and sale of personal goods. The fee structure also deserves close attention, since it has not been properly reviewed or updated since its introduction in 2014, despite the Government’s intention at the time to review annually in the light of CPI inflation. Given that these fees are paid by some of the poorest people in society, it is vital that the fees are proportionate. (Paragraph 72) 35. The fixed fee structure was designed to strike a balance between providing sufficient remuneration for enforcement agents to run a profitable business, without overly rewarding the industry to the detriment of debtors. The effective operation of the compliance stage is an important part of this, as encouraging settlement at an early stage reduces the amount paid by the debtor and encourages as much debt as possible to be collected without the need for enforcement agent visits or the additional stress and expense of the seizure and sale of personal goods. Our call for evidence sought responses on whether this is working as intended. 36. Data provided by the enforcement industry indicated that the overall effectiveness of enforcement has improved, with a greater proportion of debts now being successfully enforced than predicted: 25% of non-High court debts and 30% of High Court debts, compared with a predicted 20%. However, the proportion of debts paid in full at each stage has remained very similar to the findings of our first review and the number of non-High Court debts that were settled, being settled at the compliance stage remains lower than predicted: 37% compared with a predicted 50%. 37. The debt advice sector told both the Committee and our call for evidence that they felt the enforcement industry does not always undertake meaningful activity at the compliance stage beyond serving the notice and then waiting for the seven-day notice period to elapse, before moving to the next stage and charging the additional fee. They were concerned that there is not enough guidance or regulation about what enforcement agents need to do to explore affordable repayment plans at the compliance stage. 38. Most local authorities and enforcement firms who responded to our call for evidence thought that the fee structure was working effectively. They disagreed with the advice sector’s assertion that it is more profitable for enforcement agents to move to the enforcement stage, pointing to the expense and risks involved in making visits. Some enforcement firms reported that they had taken additional steps to encourage payment at the compliance stage, such as offering more time and using a variety of communication methods, including behavioural science techniques. 39. The Committee said that it was encouraged to hear from one firm that recovery of goods was now very rare. Data submitted to our call for evidence confirmed that appeared to have been true for the industry as a whole. Data provided by CIVEA showed that in 2017/18, only 2% of settled cases reached the sale stage. The HCEOA also reported low percentages of all cases paid in full at sale stage - 3% of cases paid in full in both 2016 and 2017, which equates to 1.2% and 0.9% of all debts received respectively. 40. The fixed fee structure was also intended to provide clarity and certainty over fees. Evidence provided by the LGSCO and the enforcement trade associations indicated that this had been the case as the number of complaints about fees had reduced significantly since 2014. There was an opposing view from the advice sector: that there remained a lack of transparency over how the fees are working and that some of the regulations were ambiguous, meaning that there are cases where fees are incorrectly applied. Concern was also raised by the advice sector and other respondents that the fees are paid by financially vulnerable people and that the fees can be disproportionate to small debts. 41. The explanatory memorandum to the Taking Control of Goods (Fees) Regulations 2014 set out a commitment to reviewing, annually, the fees set out in the Schedule, with reference to the most recent Consumer Price Index figure, rounded to the nearest £5. As the Committee notes, the fees have not yet been increased. Responses from many in the enforcement sector to our call for evidence expressed dissatisfaction that the fixed fees had not yet been increased and warned that a failure to do so may incentivise enforcement agents to escalate cases to the enforcement stage in order to collect an additional fee. 42. The Committee made the following recommendation: Recommendation 5: We recommend that the new regulator regularly reviews and makes expert recommendations to the MoJ about the fixed fee structure set out in The Taking Control of Goods (Fees) Regulations 2014. Fees should be set as low as possible while ensuring the sustainability of the enforcement industry. (Paragraph 73) 43. The Ministry of Justice agrees with the Committee’s recommendation that the fee structure should be reviewed to ensure that the fees are set as low as possible while ensuring the sustainability of the enforcement industry. We intend to carry out a further review to consider whether there is more to be done to encourage settlement of debt at the compliance stage, making it cheaper for those subject to enforcement action. We also think that it is necessary to review whether the level the fees are set at remain appropriate, given the technological, economic and regulatory changes that have taken place in the decade since they were set. Body-worn cameras 44. The Committee reached the following conclusion: Technology has moved on since the National Standards were produced in 2014. We were struck by the LGSCO’s evidence that they had not found fault with the agent’s behaviour in a single case where the enforcement agent was wearing a body-worn camera. (Paragraph 77) 45. The Government acknowledges the improvements in technology since the publication of the National Standards in 2014 and notes that many enforcement agents routinely use body-worn cameras. The Government’s call for evidence found strong evidence that body-worn cameras are valuable in protecting both enforcement agents and those subject to enforcement, raising standards in the industry and facilitating the investigation of complaints. 46. The Committee made the following recommendation: Recommendation 6: We recommend that body-worn cameras be mandatory for all enforcement agents visiting homes and businesses. We also recommend that the regulator produce good practice on their use. (Paragraph 78) 47. The Government agrees with this recommendation. On 22 July 20197 , we committed to make body-worn cameras mandatory for privately employed enforcement agents. While there is widespread support for making body-worn cameras mandatory, we recognise that this also needs to be accompanied by clear guidance on their use, including with regards to vulnerability and data protection. We will work closely with the industry, advice sector and other interested parties to develop this document. 48. As a result of the pandemic, we had to pause work to take forward this specific policy. In the meantime, we welcome a change by CIVEA which made the use of body-worn cameras mandatory for their members, which means that most private enforcement agents now use them. We intend to consult next year on how to make this a statutory requirement for all privately employed enforcement agents, as well as on best practice guidance. Footnotes 1 References to bailiffs and enforcement agents in this response refer to privately employed enforcement agents, including civil enforcement agents (also known as certificated enforcement agents), who are certificated by the county court, and High Court Enforcement Officers who are authorised by the Ministry of Justice. It does not refer to county court bailiffs who are responsible for enforcing orders of the county court and are HMCTS employees. 2 Secretary of State for Justice, Enforcement Update, HCWS 1776, 22 July 2019. 3 Ministry of Justice: Review of enforcement agent (bailiff) reforms: call for evidence, 25 November 2018. 4 The Lord Chancellor’s powers under Schedule 7 (paragraph 2) of the Courts Act in relation to the authorisation of High Court Enforcement Officers have been delegated to the Senior Master of the Queen’s Bench Division in the High Court 5 Bailiff powers when they visit your home: How to complain about a bailiff - GOV.UK (www.gov.uk) 6 Centre for Social Justice: Taking Control for Good: Introducing the Enforcement Conduct Authority (July 2021) Link to Report 7 Secretary of State for Justice, Enforcement Update, HCWS 1776, 22 July 2019. |