Does the enforcement sector need a regulator?

Back in April 2011, I issued through Bailiff Studies Centre a discussion document (number three in the series) entitled "Do we need an enforcement services ombudsman?"  The query was met with enthusiasm from some and wariness by others.  Since then, of course, matters have moved on considerably.  At the time of writing it still appeared likely that the Security Industry Authority would have some regulatory role in the sector and that the introduction of the reformed regime of bailiff law would lead to a considerable strengthening of the procedures for licencing and monitoring individual agents.

None of that happened.  The SIA dropped out of the picture and the rejigged certification process brought in to the Civil Procedure Rules in 2014 is very far from comprehensive or robust.  We were promised thorough training for county court district judges; there is little evidence of this.  A recent issue of Bailiff Studies Bulletin highlighted some of the problems with the qualifications upon which certificates are issued and there is, of course, no regulation of agencies, only individual agents- a bizarre result in the early 21st century.  

We still lack any sector overview and any industry wide maintenance of standards or best practice.  It seems to me that there is still a very strong argument for some for of regulator (the commercial body Ombudsman Services were interested in the function five years ago).  I would propose, too, that this regulation is not limited to enforcement agents and agencies.  I suggest that there would be a useful function for all parties (not just debtors) for those offering advice on bailiff law also to be regulated.  With the proliferation of web based advice and consumer forums, I believe that there may be a role in setting and maintaining standards wherever consumers are asked to pay for advice on dealing with debt enforcement.

Another proposal for regulation that is currently in circulation is the idea of extending the remit of the Financial Conduct Authority (FCA) to bailiff services.  The main argument for this appears to be that it is anomalous for debt collection by taking control of goods to stand outside of FCA supervision when almost all other forms of debt collection are now regulated by them.  The largely unregulated status of the enforcement sector might be said, in itself, to be anomalous, but there is another more compelling argument which will possibly have to be confronted before too long.  That is, if county court judgment enforcement is opened up to the private sector (as has been suggested)- and especially if that liberalisation extends not just to HCEOs but also to certificated enforcement agents (bailiffs in the traditional sense) then compliance with FCA rules may become obligatory in any case.  Access to the work of executing county court warrants of control would almost inevitably include the recovery of Consumer Credit Act 1974 regulated agreements and that would necessitate FCA licencing.  The FCA regime is tough, but it might also go a long way to creating confidence in a professional enforcement sector and thereby eradicating the kinds of doubts and suspicions which then generate hostile and confrontational advice in some online fora.

Whether a new regulatory body is introduced or not, the current certification complaints process will still manifestly have a future: in cases of gross misconduct by an agent it enables the courts to exclude an individual from the profession and to forfeit all or part of the bond to provide compensation and pay costs.  However:

• it is not apparent that the promised training for district judges has been provided by MoJ, given the reports of widely varying handling of certification matters;
• Only individuals are certificated, not companies, and yet companies are the major factor in the sector in shaping practice and procedure; and,
• the bond remains at £10,000, the same figure as when it was last fixed in 1988.  This drastically reduces the threshold to the sector without providing an equivalent level of sanction.

Students & enforcement

At the start of the week I attended the annual conference of NASMA (National Association of Student Money Advisers) in Solihull and gave a presentation on the 'new' bailiff law.  The audience had its particular perspective and preoccupations, but a number of themes were significant:

• use of HCEOs by colleges- there has been a notable increase in educational institutions pursuing students (or former students) through the county court and then transferring their CCJs to the High Court for enforcement.  Grants, fees and similar are now pursued with significantly higher fees added against individuals who will frequently have scant assets or income.  For instance, I once assisted a student who had had to drop out of her course  because she got pregnant.  Despite being a single parent on Income Support in a council flat, her previous college chose to send an HCEO to chase her.  What possible point was there to that?  Would he take the cot or the milk bottle steriliser?  Shame on the college...
• rights of entry- as may be imagined, enforcement agents can face some severe problems accessing student accommodation when it is in halls of residence and purpose built blocks and general issues of access to private land can often serve to protect students from taking control of goods.  Likewise in the traditional shared house, locked rooms are likely to be a further obstacle even if it is possible to get through the front door of the house.
• third party goods- ownership of goods is going to be a second major hurdle or source of contention.  In halls much of the property will belong to the college; the same will be the case in rented houses, coupled with arguments over items whose use is shared with other house mates but which belong to someone else.  Questions over property at parental homes (combined with the question as to whether they are any longer the 'usual' residence of the student debtor) are likely to generate contention.  Further disputes may arise for mature students who are in relationships and have complex questions of property with their partners/ spouses.
• exempt goods- even were much of the furnishing of student accommodation the student's, it would very likely be protected as exempted household necessities.  Of all groups, students are perhaps most noticeable for their gain of specific protection for items needed for study under the 2013 Taking Control of Goods regulations.  Equipment and books needed for education or study are protected from being taken into control provided that their aggregate value does not exceed £1350 (reg.4).  Accordingly, a student's laptop, printer and other hardware (the key tools of many courses these days and the repository of essays as well as access route to online library resources) may well be protected.  In the context of the issues listed above, this was definitely something to welcome.

Where are we now?

Two years and two months into the reformed regime of enforcement law, how has the landscape changed?  How radically different is enforcement in 2016 to bailiff action in March 2014?

It is a mixed picture.  The major source of complaint before (it is safe to say) was fees.  The new fee scale, by being more remunerative at an early stage and by eliminating much of the scope for disputed interpretation, has by and large eradicated contention.  For all parties, this must be a welcome improvement- and a considerable saving of time and resources.

Equally, by front loading fees and discouraging removals, the new procedure has probably further reduced the already low numbers of disposals of goods, which must again benefit debtors and creditors.

On the downside, many of the old causes of dissension remain: arguments continue over the classification of exempted and third party goods, over the rights of entry, over the valuation of assets and over the treatment of 'vulnerable' debtors.  There are still some problems of interpretation and application linked to fees- most notably the question of VAT.  The majority of the issues just listed concern the proper manner of taking control of goods, and accordingly are still a major reason for complaints and discontent.  As most of these questions are not new, and as most of these arguments simply perpetuate arguments from before the law was reformed, it may be suggested that we still await a fundamental reform in approaches to enforcement law.

Bankruptcy & bailiffs

I was recently asked for advice on a case involving the enforcement of a local authority penalty charge notice (PCN) against a bankrupt individual. This leads to a few interesting observations on insolvency in the wake of the implementation of the taking control of goods regime.
Although Sch.13 of the Enforcement Act 2007 amended many existing statutes in recognition of the repeal of powers of distress and execution, for reasons best known to themselves Ministry of Justice left the Insolvency Act 1986 untouched. The old terminology remains in place- and we must mentally correct it as we read. At the same time, it is worth remarking that 'execution' as a term describing the enforcement of court judgments is retained in the new Civil Procedure Rules Part 83- as, for that matter, is 'levying'.

Now, a county court order for the recovery of a local authority PCN is to be regarded as identical to a county court judgment. Likewise the warrant of control: it may be enforced by a certificated bailiff, but it is equivalent to a warrant issued to a county court bailiff. Certain special rules of conduct apply to such warrants (and writs) of control- see Insolvency Act s.346, but the basic rule is simple: under s.285(3) all enforcement action must cease once a bankruptcy order has been made. The only exception to this would be where permission of court has been obtained to continue with a levy- but this is unlikely to be granted in all but the most exceptional of cases. For certain tax debts only, bailiffs may continue to take control during the 12 months of the bankruptcy order, but this power contained in s.347(8) is NOT relevant to the recovery of PCNs by execution.

I was consulted in a case where enforcement action has continued for the best part of 9 months after the insolvency began.  This appears inexcusable: the council was informed that the debt was part of a bankruptcy, after which they permitted enforcement to continue.  Both the council and the bailiffs were directly contacted again by the Official Receiver to tell them to cease their recovery action.  This did not happen.  This failure to act correctly was componded by the fact that, when the agent arrived at the house he stated (it is alleged) that he was a police officer and that he was unaffected by the bankruptcy. This worked, in that he was paid £512, but this was a payment prejudicial to the others creditors in the insolvency and will have to be refunded.

The principal message is this: the interaction between insolvency and enforcement is unchanged by the implementation of the Enforcement Act 2007 and the basic rule of practice that continues to apply is simple- most attempts to take control of goods will be terminated by the bankruptcy, winding up etc.

The other message of this case is for the local authority and its enforcement agents: check the law, comply with it- and respond in a timely fashion to contacts.  They have so far received four letters each, including a draft county court claim, and the only response made to date was a very poorly informed letter from a complaints officer at the bailiff's company expressing the opinion (for it was no more than misguided prejudice) that PCNs were unlikely to be included in bankruptcy.  This was patently wrong and ignored the OR's specific guidance on the case.  The only thing to be said in their defence was that they inaccurately referred to the PCN as a parking 'fine'.  If it were a fine, then enforcement could continue- but it is not.....

The new Black Acts

It seems we may be entering a new Georgian age. The 18th century is famed for the number of property offences for which the punishment was death. Poaching is most notorious, but a range of other more minor crimes also attracted a capital penalty. As we enter 2014, we seem to be recriminalising offences against property- matters which have perfectly well been protected by civil sanctions previously. The Prevention of Social Housing Fraud Act 2013 is the most extreme example, making it a criminal offence to sublet your council house. It seems that eviction was not bad enough. Now, with the imminent implementation of the Tribunals, Courts & Enforcement Act 2007, another new offence arrives. Under Sch.12 para.68 of the 2007 Act it becomes an offence to interfere with goods taken into control and to obstruct a bailiff. The former replaces the longstanding- if redundant- offences of rescue and poundbreach. The second offence is new and its scope is as yet uncertain. Comparing the new misdemeanour to obstruction of a police officer, it seems likely that the conduct likely to constitute this offence will involve matters less than assault and battery- for which sanctions already exist- and may include nonviolent obstruction, lying, abuse and unhelpfulness. It is interesting to speculate how much this may effect future protest movements- and how much it was intended to inhibit protest. Objections to government policy (especially, of course, tax policy) has often manifested itself through tax refusal. Henry David Thoureau writing On the duty of civil disobedience said that refusing taxes was the "simplest, most effectual, ... the indispensablest mode" of resistance. "This in fact is the definition of a peaceful revolution, if any such is possible." Protest by means of resistance to bailiffs has been fully described in The Victorian bailiff, Distraint and discontent and, most recently, Weapon of authority but I shall illustrate this theme by one further, if rather extreme, example. In 1914 the East London Suffrage Federation proposed a rent strike as a way of demanding the vote for women. In support of this campaign they organised a People's Army. In the context of paramilitary forces forming in northern Ireland at the time, this might have eemed slightly less remarkable than it does now, but it was still a challenging action. The Army drilled at Ford Road, Bow and promised to defeat bailiffs sent to break the strike: if intimidation of landlords did not succeed, and the brokers were put in, "they will rescue the furniture and carry it home in triumph..." (The Syndicalist vol.III, no.1, Jan.1914 p.1; The Woman's Dreadnought Advance issue, March 1914 p.8). If such direct action failed, the Army promised to attend sales, pack the auction rooms and bid a penny per item so as to "baffle the bailiff." The rent strike and action against bailiffs were "The Working Women's Weapon." Despite these brave words of Sylvia Pankhurst, this particular campaign never took off. In fact, the greatest success of the ELF was lobbying against individual distraints during the First World War (Woman's Dreadnought no.25, Sept.5th 1914 p.1)and generally campaigning on behalf of the vulnerable suffering as a result of the conflict. Nonetheless, it is clear that such actions today, even if no violence of any description is provoked, will potentially lead to prosecutions of dissenters, a penalty for their dissent alone. How much the new offence is utilised- and how much it effects the future of civil disobedience- remains to be seen...

The dialectics of distraint

Researching the use of distraint for harbour dues etc, (for which see Powers of distress 2009) I came across material also on the use of distraint during the industrial revolution (see The Victorian bailiff- conflict & change c.1), which set me thinking too about the use of distraint as described in Weapon of authority chapter 4.

In the case of Swire v Leach (1865) Serjeant Sandars, appearing as counsel for the plaintiff, argued on appeal that "The right of the landlord to distrain for rent is an exception on the common law of England."  Is this true?

If we consider the granting of powers of distraint to railway and canal companies- as well as to private ports and markets- it seems that this statement is incorrect.  The landlord's right of distraint may have been the first devolution of the state's powers of execution onto a private individual, but the later grants by Parliament are a similar privilege allowed to newer forms of capital.  Just as property in land was favoured with extra-judicial rights, so property rights in industrial enterprises received a similar beneficial treatment, so as to encourage and assist them.

It may be argued that these rights of seizure for toll etc are more akin to distress damage feasant- which may be true- but then, that too is a privilege of the owner of property.  Another interpretation of these instances might be this:  In Proprietors of the Stourbridge Canal v Wheeley (1831) 2 B&A 792 Lord Tenterden CJ characterises these statutory rights of distraint as the result of a bargain with the public.  The beneficiary acts in the public interest, performing a public function, and consequently is given the advantage and encouragement of the use of devolved state rights.  The capitalist ventures his time and resources; this is supported by the Crown which lends its authority to the endeavour.  This a more benign representation of the agreement, but we are still dealing with certain individuals and interests being privileged with rights of self help outside the judicial system for the purposes of enhancing private enterprise and profit (as well as, if not equally with, providing a public benefit).

Many of these private rights of execution have since lapsed, but they still persist in the hands of some private ports and market operators, so the landlord's right is still not unique. All remain examples of state power delegated to private hands.

Cameron's poll tax has arrived

The beginning of April saw the replacement of council tax benefit by council tax reduction schemes in every local authority.  The new schemes are not 'benefits'- they are regarded as an extension of the various exemptions and discounts that applied already to the tax; secondly, they are local, not national, so that every council's arrangements will be different in detail.  One thing does apply nationally, though, and that it the fact that everyone will have to pay something.  Previously council tax benefit covered 100% of the liability for those on certain benefits such as Job Seekers' Allowance and Income Support.  Now they must pay a minimum contribution of at least 5%- although their income has not gone up to assist with this.  In fact, as we know, benefit rises have been reduced.

This measure cannot be viewed alone.  It must be considered alongside the bedroom tax and the benefit cap. The impact of these will be to require low income tenants to also contribute extra sums out of their subsistence incomes to cover rent no longer covered by housing benefit.  The benefit cap seems particularly unjust: the major proportion of most weekly benefit payments are housing benefit.  That money, of course, goes straight to landlords to pay their rents.  The weekly benefit entitlements sound enormous, but this is misleading as it is the landlords, not the tenants, who are gaining.  In the present overheated private rental market, it is unrealistic to suggest that tenants can easily move- or move to any cheaper accommodation- and certainly improbable to imagine that most private landlords will negotiate lower rents.  If the HB bill is too high, cap rents- don't punish the consumer!  But that is not how the government has decided to solve this problem.  It seems that they have never heard of "fair rents" or recall the role of the local authority rent officer in fixing a maximum reasonable rent for a property.  That would have been the proper way to address the problem.  Instead, tenants are asked to find money from the sums paid to them for food and fuel to cover large contributions to top up the HB. 

So, what will be the effect?  Well, what would you pay if you had to choose: your rent (or face certain eviction) or your council tax (and face a liability order and a bailiff's visit- when you don't have to let the bailiffs in)?  Any rational person will pay the landlord and not the new council tax liability.  Money will be extremely tight and very difficult choices will be involved, but this is what many advice agencies will have to be telling clients.

What will be the impact for local councils?  They will see rent arrears rising from those hit by the bedroom tax but trapped in their current accommodation; they will see CT arrears rise as people prefer rent over tax.  In addition, as the schemes for reductions have been devised locally at great cost to each council, there will probably be many initial appeals to the Valuation Tribunals to challenge the details and workings of these new regimes.  These will clog up the system and incur substantial expense for local authority staff.

More work for bailiffs, then, but tiny debts owed by people who are desperately short of money.  Nice one, Dave.