SIGNIFICANT CHALLENGES AHEAD
REVIEW OF THE PRE-ACTION PROTOCOLS

Restons Solicitors

Legal News | 09/02/22

The start of 2022 sees the continuation of the Civil Justice Council review of the pre-action protocols (PAP), which may result in changes to the process. While some would be welcomed, others may present significant challenges to the debt collections industry. There are four key areas which are being looked at for debt claims; however, one key message should absolutely remain the same and that is to encourage engagement between the debtor and creditor (or their appointed representative). Increased engagement helps to reduce the number of claims being initiated through what is already a creaking justice system. The original debt PAP unfortunately did not have that desired effect.

Here are the main areas being looked at:

1. TIMEFRAME TO RESPOND TO THE LETTER OF CLAIM
Currently, the allowance is thirty days for the debtor to respond which, overall, is appropriate and we do not feel this needs to change. If a debtor were to engage before proceedings have been issued, stating they were seeking assistance from a third party in managing their debts, the industry standard is to offer a thirty day hold. It therefore makes sense to allow the same time for the customer to seek advice in responding to a claim and keep it consistent.

2. CONTENT OF THE LETTER CLAIM
This was an area of contention in the original debt PAP with the potential requirement to include certain documents in the Letter of Claim, particularly a copy of the credit agreement. It is an area that we still believe is not necessary when considering what PAP is trying to achieve i.e. early engagement to avoid litigation. There are many reasons why someone chooses not to engage; for example, fear or embarrassment, but the number of people that do not engage because the debt is disputed is generally low. The information contained in the Letter of Claim would generally allow an individual to identify the debt in question. If not, and the debtor raises a dispute, the matter would be referred back to the Client with all activity temporarily suspended.

3. LANGUAGE AND LENGTH OF PAP
The debt PAP is, after all, a legal document designed for a particular purpose and, while generally we welcome attempts to use more “plain English”, the language used currently is both clear and concise.

4. INTEGRATION INTO MONEY CLAIMS ONLINE
Any steps being considered that would digitalise the process for all parties are very welcome. As a business, we have taken numerous steps to allow debtors to follow a digital journey, should they so choose and feel this progress is significantly overdue and fundamental to treating customers fairly.

In summary, reform is something to be welcomed by the industry. However, it needs to strike the correct balance between encouraging early engagement and the fact that this is a legal process. Engagement is a barrier that is faced across the industry, from early stages of delinquency through to litigation and is something businesses continually strive to improve.

While societal attitudes to debt have improved, there remains a stigma that is the biggest barrier to allowing customers to engage with debt collectors and regain financial freedom.