Simple is as simple does - Why the Pre-action protocol for debt claims is bound to fail
In October this year businesses who deal with consumers are bracing themselves for the additional noise their printers and post-rooms will be making moving forward as they start to print huge volumes of additional documents and spend lots more on their postage costs when chasing their debts. ISO environmental certifications will be put at risk as their post staff spend half their lives shuffling additional reams of paper and their office staff half their lives dealing with all the additional queries they will be faced with trying to ensure they meet the new regulatory requirements of the Pre-action protocol for debt claims.
The above might seem like a mild over exaggeration but the reality is that these changes will cost businesses more in time and resources. For that reason, I find this a very strange amendment to the court rules; not least because it takes a simplistic process which was working really well in almost all cases ("Simple is as simple does") and instead introduces strict requirements regarding the exchange of information, which must be dealt with, prior to the issuing of any legal proceedings.
It is obvious to me that being so prescriptive about the process will damage the quick and efficient way of dealing with people who refuse to pay. In fact, it actually tees things up nicely for that type of debtor who just refuses to pay. This type of debtor will now be armed with a good reason to drag the process out for even longer. Indeed, by my calculations, as a debtor, under the new rules you will easily be able to drag a dispute out beyond 80+ days and there will be little sanction for doing so. Not bad credit terms at all - especially for people who are not that creditworthy!
Why then was this approach accepted and adopted by the Civil Procedure Rules Committee? Again, the answer is not very clear at all and when you consider who makes those decisions (Lord Justice Briggs and his team) you are left with an even foggier understanding of why this decision to introduce a protocol was taken. In his review of the Court structure Lord Justice Briggs had this to say at paragraph 6.74 about the proposed Online Solutions Court; a Court which he sees as being suitable for dealing with debt claims:-
"I would add that, despite suggestions by a few consultees to the contrary, I do not regard the erection of a pre-action protocol procedure as at all suitable to the Online Court. At the most it might recommend a simple exchange of correspondence."
When you put that comment into context you struggle somewhat to understand why would you take a process that requires only 2 pages and is slick, quick and cheap and change it into one that is 10 pages+ long and is going to lead to even more work dealing with queries etc. Costs are of course already notoriously difficult to recover in this arena so why introduce something which is likely to take three times as long to execute just because it might help a small minority! It really is a bit of a worrying mystery and albeit we can all see the good intentions behind this I think the reality is that UK businesses have not had their voice properly heard.
The "Nudge Unit", a team of behavioural psychologists, who were set up by the Government in 2011, were actually tasked a few years ago with looking at whether or not sending different types of debt recovery letters had a different impact. From memory, I believe they looked specifically at self-assessment tax returns. Amongst many other things the study revealed that in many cases more is less and if you keep it simple when you ask for your payment then you are more likely to get a better level of engagement from your debtor, which will lead to better recovery rates. From what I have read of the protocol it seems as though the Civil Procedure Rules Committee and/or the sub-committee set up to look at the Pre-action protocol for debt claims missed this point completely. I suspect if you were to ask the "Nudge Unit" if this protocol is going to work I'm fairly sure they would have something useful to say about it and I'm fairly sure they would conclude that there are far better ways to go about this.
In conclusion, I suspect only time will tell whether the Pre-action protocol for debt claims is a good thing or not. The debtors who directly benefit from it will no doubt sing its praises (why wouldn't they) but I am sure the vast majority of UK businesses will not be happy. Another period of buckle tightening is probably just around the corner for the UK and anything which hampers your ability to collect money, which you are rightly entitled to, is obviously not going to be welcomed.
If you want to learn more about the forthcoming changes then why not log on to our webinar to pick up a few tips on how to deal with the protocol when it comes in to force. Visit my firm's website to register for the event https://www.dwf.law/news-events/events/2017/09/pre-action-protocol-for-debt-claims-webinar/
The above might seem like a mild over exaggeration but the reality is that these changes will cost businesses more in time and resources. For that reason, I find this a very strange amendment to the court rules; not least because it takes a simplistic process which was working really well in almost all cases ("Simple is as simple does") and instead introduces strict requirements regarding the exchange of information, which must be dealt with, prior to the issuing of any legal proceedings.
It is obvious to me that being so prescriptive about the process will damage the quick and efficient way of dealing with people who refuse to pay. In fact, it actually tees things up nicely for that type of debtor who just refuses to pay. This type of debtor will now be armed with a good reason to drag the process out for even longer. Indeed, by my calculations, as a debtor, under the new rules you will easily be able to drag a dispute out beyond 80+ days and there will be little sanction for doing so. Not bad credit terms at all - especially for people who are not that creditworthy!
Why then was this approach accepted and adopted by the Civil Procedure Rules Committee? Again, the answer is not very clear at all and when you consider who makes those decisions (Lord Justice Briggs and his team) you are left with an even foggier understanding of why this decision to introduce a protocol was taken. In his review of the Court structure Lord Justice Briggs had this to say at paragraph 6.74 about the proposed Online Solutions Court; a Court which he sees as being suitable for dealing with debt claims:-
"I would add that, despite suggestions by a few consultees to the contrary, I do not regard the erection of a pre-action protocol procedure as at all suitable to the Online Court. At the most it might recommend a simple exchange of correspondence."
When you put that comment into context you struggle somewhat to understand why would you take a process that requires only 2 pages and is slick, quick and cheap and change it into one that is 10 pages+ long and is going to lead to even more work dealing with queries etc. Costs are of course already notoriously difficult to recover in this arena so why introduce something which is likely to take three times as long to execute just because it might help a small minority! It really is a bit of a worrying mystery and albeit we can all see the good intentions behind this I think the reality is that UK businesses have not had their voice properly heard.
The "Nudge Unit", a team of behavioural psychologists, who were set up by the Government in 2011, were actually tasked a few years ago with looking at whether or not sending different types of debt recovery letters had a different impact. From memory, I believe they looked specifically at self-assessment tax returns. Amongst many other things the study revealed that in many cases more is less and if you keep it simple when you ask for your payment then you are more likely to get a better level of engagement from your debtor, which will lead to better recovery rates. From what I have read of the protocol it seems as though the Civil Procedure Rules Committee and/or the sub-committee set up to look at the Pre-action protocol for debt claims missed this point completely. I suspect if you were to ask the "Nudge Unit" if this protocol is going to work I'm fairly sure they would have something useful to say about it and I'm fairly sure they would conclude that there are far better ways to go about this.
In conclusion, I suspect only time will tell whether the Pre-action protocol for debt claims is a good thing or not. The debtors who directly benefit from it will no doubt sing its praises (why wouldn't they) but I am sure the vast majority of UK businesses will not be happy. Another period of buckle tightening is probably just around the corner for the UK and anything which hampers your ability to collect money, which you are rightly entitled to, is obviously not going to be welcomed.
If you want to learn more about the forthcoming changes then why not log on to our webinar to pick up a few tips on how to deal with the protocol when it comes in to force. Visit my firm's website to register for the event https://www.dwf.law/news-events/events/2017/09/pre-action-protocol-for-debt-claims-webinar/
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