It is the opinion of the Ministry of Justice that ‘Bailiffs are necessary for both the economy and the justice system. They carry out a difficult role in often challenging circumstances, and the majority operate in a responsible and proportionate manner. However, a significant few use intimidating behaviour, treat debtors unfairly and cause unnecessary distress, destroying the reputation of the majority. The Government is committed to strengthening protections against these rogue bailiffs and the unsound, unsafe or unfair methods that they use, while at the same time making sure that debts can still be collected fairly’.
It is for this reason that the Government is introducing new measures in April next year to clarify the law, introduce a transparent fee structure and regulate the industry. The implementation of Part 3 of the Tribunals, Courts and Enforcement Act 2007 (TCE Act) scheduled for 6 April 2014 is, amongst other things, going to set into statute the fees that bailiffs can charge.
Based on the proposed fee structure, and some assumptions around inflation and VAT, I think it is fair to assume that the fee for a single bailiff visit after 6 April 2014 will be around £400 (administration fee plus enforcement fee). This is significantly higher than the fees currently contracted by local authorities for a single visit and will be considered disproportionate by many publicly elected councillors. So, whilst, in the opinion of most, the increased regulation of the enforcement industry is long overdue, these changes are undoubtedly going to have a significant impact on how local authorities recover arrears in a number of crucial revenue areas. At a time of funding cuts, welfare reform and increased scrutiny, councils would be well advised to start planning now to mitigate the impact of these changes.
However, I believe councils can take comfort from tried and tested techniques already in use in the private sector and, as a result, these changes could actually result in increased recovery rates, improved internal efficiencies and a reduction in the total bailiff fees charged. The key is the administration fee stage. If councils can provide the right information and motivation to enforcement agents to collect at this stage, then time to collect should shorten, fees reduce and the customer experience improve.
For some years now private sector creditors have been implementing increasingly sophisticated debt recovery strategies designed to maximise collection rates whilst at the same time adhering to Treating Customers Fairly (TCF) principles. Many of them have similar challenges and processes to the public sector; there are some particularly strong parallels with the water sector, for example.
A debt recovery strategy that includes data enrichment to improve access to contact details, alongside a better system of matching and managing enforcement agencies, could help free up resource, improve performance and limit fees.
Adopted from the private sector, a new breed of tools and services are finally allowing councils to implement and execute strategies suited to the unique circumstances and goals of local government. This could include managing enforcement agencies in a manner that incentivises them to collect at administration stage rather than letting cases escalate to the more expensive enforcement stage. What is more, with the right tools in place, strategy becomes an iterative process allowing councils to test and learn, continuously improving and reacting to an environment that is, by its very nature, constantly evolving.
In the present climate local authorities are dealing with significant change. Unprecedented funding cuts, welfare reform and regulatory change all combine to make an extremely challenging climate. But there are also opportunities. Enterprising authorities are finding imaginative solutions that mitigate the changes and improve their position both today and for the long term.
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Paul Fielder, Strategic Account Director, TDX Group