In 2010, Lord Justice Jackson recommended that there be a specific debt recovery pre-action protocol, instead of parties having to use the general practice direction on pre-action conflict.
About the debt protocol
The debt protocol will apply to businesses, sole traders and public bodies claiming payment of a debt from an individual. It will not apply to business-to-business debt, unless the debtor is a sole trader.
The debt protocol’s aims are to:
- Enable the parties to resolve the matter without the need to start court proceedings, including considering using an Alternative Dispute Resolution (ADR) procedure or agreeing a reasonable repayment plan;
- Encourage early exchange of sufficient information about the matter to help clarify the issues in dispute;
- Encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (which includes only incurring costs which bear a reasonable relationship to the sums in issue);
- Support the efficient management of proceedings that cannot be avoided.
The consultation on the first draft in 2014 concluded that the proposals were not friendly to the consumer, particularly with regards to the use of technical legal terminology that the consumer was unlikely to understand well enough, was confusing and replicated much of what is already done prior to a claim being made.
It was also felt that the requirement upon the creditor to provide all documentation with the letter of claim, along with a copy of the debt protocol, was putting a considerable burden on the creditor, with these extra costs not necessarily being recoverable.
A sub-committee of the Civil Procedure Rules Committee (CPRC) was set up in 2015, including representatives from a debt purchaser debt advisor and the Civil Court Users Association (CCUA) to represent all parties. This led to the preparation of a second draft, which aimed to provide a fairer balance between providing information for the debtor and the cost to the creditor for providing it.
It proposed that:
- The most important information would be sent with the letter of claim with other information and documents avail be on request
- The creditor would no longer need to send a copy of the debt protocol or reproduce the notice information the debtor of the procedure; there would be replaced by a plain English information sheet about their rights and obligations
- The debtor will have 30 days to respond to the letter of claim and no proceedings may be undertaken within 30 days of sending the letter of claim
- The creditor will have to provide a copy of the original written agreement with the debtor (although there have been those suggesting that this may be challenging for some, particularly if the debt has been assigned)
The second draft was put to consultation at the end of 2015, closing in January 2016, but we understand that more work is required and that drafting continues. We watch this space!
David is an authorised High Court Enforcement Officer and our Director of Corporate Governance