Society wants those who owe money judgments to pay their dues but also wants to protect the vulnerable. We all want to prevent unacceptable behaviour from those with the difficult task of making debtors pay but we also want to ensure that creditors, many of whom may be in financial difficulties themselves, receive the money to which they are properly entitled. It is important that individuals have the right to manage their own financial affairs, but we are all concerned to address issues of overindebtedness. We must protect individuals' rights to privacy while recognising that controlled access to information about debtors' circumstances is essential, since there will always be those who deliberately seek to avoid payment.
The courts and those who bear the responsibility of enforcing the courts' judgments have to find a way to balance these competing demands and achieve the fair balance between rights and responsibilities, for both debtors and creditors, which we all expect in a modern and democratic society.
The Civil Enforcement Review has been a comprehensive and thorough piece of work for the Lord Chancellor's Department; it is an important part of the civil justice reforms. The issues involved are sensitive, complicated and finely balanced; they are at the heart of the justice system and fundamental to its aims. There have been several previous attempts to review the enforcement system - they changed little of substance. This time we believe that we have got it right not only because we have delivered tangible results along the way but because, most importantly we have engaged in detailed and extensive consultation through working groups and expert panels and the publication of several reports and a great deal of research. We are grateful to everyone who has participated in the Review including, county court staff and bailiffs, court users, debt advisors and private sector bailiffs. There are no easy answers and no 'quick fixes' but as a result of your involvement and support we believe that this comprehensive package of proposals for legislative change is soundly based and will be effective - we commend it to you.
|Lord Irvine of Lairg||Baroness Scotland of Asthal QC|
The Government is committed to improving access to, and the efficiency of, civil justice. It is crucial that creditors who have established a legitimate claim should be able to pursue it through a straightforward and accessible system, and if necessary enforce a judgment by the most appropriate means. Equally, debtors who genuinely do not have the means to pay should be protected from the oppressive pursuit of their debts.
The Civil Enforcement Review has carefully considered the existing mechanisms and legislative processes for enforcement - much of which are archaic. It effectively draws to an end now with the comprehensive package of proposals for enforcement agents, data disclosure orders and other court based enforcement methods that are set out in the White Paper Effective Enforcement and summarised here. These will put in place a system that is better equipped to deliver effective enforcement now and to adapt in the future. Civil justice and its enforcement processes have to continue to evolve and be responsive to other changes, for example the ongoing work in respect of personal insolvency, ideas arising from the criminal justice reforms presently before Parliament, and from Europe.
This Summary document provides a brief overview of the proposals contained in the White Paper. Full versions of the White Paper are available from The Stationery Office, or are available on this website.
The White Paper describes the important role that enforcement plays in the civil justice system and in a modern, democratic society, which requires ways to enforce payments such as taxes. Without effective means of enforcement people ordered to pay a court judgment or criminal penalty would have little or no incentive to do so and the authority of the courts, the effectiveness of penalties, and confidence in the justice system would all be undermined.
The Green Paper Towards Effective Enforcement (July 2001) explored the existing arrangements and the need for change in the regulation of enforcement agents. Responses indicated overwhelming support for increased regulation, and a majority in support of establishing a statutory executive non-departmental public body to regulate private and public enforcement agents.
The White Paper now sets out detailed proposals, and explains the need for, an adequate regulatory mechanism, unified law and fairer fee structure for all enforcement agents to enable straightforward effective warrant enforcement and protect vulnerable debtors who genuinely cannot pay. It explains that in the Government's view there may always be a need for the power to take legal control of goods in order to enforce a debt but that this should only be permitted within a regulated structure and with appropriate safeguards.
This White Paper contains detailed proposals on how, with a broadened role, the SIA (Security Industries Authority) could licence all enforcement agents who take legal control of goods, undertake committal/arrest or seek access to information. The important role that professional associations and training providers will play in assisting the SIA to raise standards across the sector is also identified.
The central message from this Review is that access to better information is the key to effective enforcement. More information is needed to facilitate better choice and targeting of enforcement methods. The White Paper sets out detailed and carefully argued proposals to show how this can be achieved, through the proposed Data Disclosure Order (DDO) procedure. The DDO, as an order of the court, would place a clear legal obligation on the parties to disclose information. It is noted that the Office of the Information Commissioner has been consulted, and recognising that the proposed procedures seek to strike an appropriate balance between the legitimate interests of creditors and proper respect for the privacy rights of individuals, has confirmed they see no reason why the process should lead to contravention of the Data Protection Act.
The White Paper goes on to explore improvements to other court based enforcement methods. It sets out detailed proposals to vastly improve the procedure of debt recovery through deductions from earnings by tracking debtors who change employers and the use of fixed deduction rates. These proposals could halve the processing time for Attachment of Earnings Orders, and would be beneficial for debtors, creditors and employees. The proposed changes to Charging Orders are then explained in detail in the White Paper, showing how the interests of debtors and creditors would be carefully safeguarded.
Aims and objectives for the regulation of enforcement services
The current enforcement profession is fragmented, with some firms and individuals operating outside of any structures and some evidence of threats and intimidation being used against vulnerable people in their own homes. Whilst the introduction of a single piece of law for enforcement agents and a revision of the fee structure will address some of the areas of malpractice, without regulation the impact of these changes would be insufficient.
Regulation, through a statutory body, must ensure that warrant enforcement is carried out appropriately, effectively and fairly in relation to both debtors and creditors. It is proposed that the Authority will regulate all public and private enforcement services across all areas of warrant enforcement: the High Court and county courts, magistrates' courts, road traffic act penalties, local and national taxes and duties, maintenance and child support.
The Government wants to raise standards across the profession, and promote best practice, fostering public confidence and creating a level playing field for all. Post judgment, the creditor has an entitlement to expect his claim to be enforced and for the reasonable costs of enforcement to be met by the debtor. It is right that creditors should make the choice about the enforcement method and have some choice about the enforcement agent they use. These choices must be well informed and exercised fairly. The indiscriminate or inappropriate use of distress is unacceptable: many debtors are in vulnerable situations and some simply cannot afford to pay.
All enforcement agents must be required to balance their duties to the court, the creditor and the debtor. They all do a difficult job, they all have broadly the same powers and must all behave in an appropriate way. All service users - whether creditors or debtors - are entitled to expect high professional standards.
We therefore see the need for a system of regulatory control that as far as possible will apply in a uniform way but that will be sufficiently flexible to be relevant to the needs of all service users and embrace the public and private sectors, with variations of approach where necessary and justified.
In accordance with guidance on Better Regulation, we have considered whether any other existing body could meet the sectors needs. The only body we identified whose roles and responsibilities seemed comparable was the Security Industry Authority (SIA). The SIA seems broadly to cover the purpose of an Enforcement Services Commission as proposed in the Green Paper. We believe therefore that with a broadened scope the SIA would be a suitable body to regulate enforcement services in principle and in practice. There is a broad but not exact fit between what we are seeking to achieve in regulating enforcement agents and the remit given to the SIA by the Private Security Industry Act 2001.
The proposed enhanced remit is to enable the SIA to regulate enforcement services and does not cover any of their other sectors for which they have responsibility.
Primary legislation would be needed in order to accommodate the broadening of its current functions. It is our intention that the primary legislation would prescribe those broad requirements. These requirements will be underpinned by secondary legislation. The SIA would, however, be given considerable autonomy consistent with its status as an executive Non-Departmental Public Body (NDPB) to determine how it goes about its tasks.
The primary legislation would need to provide for:
the inclusion of enforcement services;
licensing all enforcement agents;
approving authorised enforcement service providers;
accrediting professional associations;
authorising training providers;
setting up a Complaints Board under the SIA Board; and
to allow the SIA to make recommendations to the Lord Chancellor.
Secondary legislation areas will include criteria for approvals, accreditation, authorisations and exemptions.
Areas of detail we would like to see the SIA consider include:
Criteria for licences for the enforcement sector;
issuing a code of practice;
requirements for applications;
requirements for retaining licences;
the complaints process.
Responses to the Green Paper indicated overwhelming support for increased regulation, and a majority in support of establishing a statutory executive non-departmental public body (NDPB) to regulate private and public enforcement agents. In accordance with guidance on Better Regulation, considered whether any other body could meet our needs. It will be more cost effective to use an existing regulatory body rather than set up a separate Commission
Scope to licence all Enforcement Agents
To be allowed to undertake enforcement work an individual will have to be licensed by the Authority, or hold an interim licence and be undertaking training under the supervision of a licensed enforcement agent with a view to becoming a full licence holder.
It will be an offence to undertake the designated activities and functions without a licence. This will be in line with the criminal offences for operating as an unlicensed security operative under the Private Security Industry Act 2001; unlicensed agents will be liable to imprisonment and/or a fine. The Authority's Inspectorate will have the power to check on both licensed and unlicensed individuals.
Individual enforcement agents will have to apply for a licence relevant to their area of work and expertise in order to exercise their relevant functions. We are recommending four separate licences for:
Taking legal control of goods: Allowing an enforcement agent to go to the debtor's door, seize goods, collect payment, or, in lieu of payment, negotiate repayment options (at the request of the creditor), levy, seize, remove and sell goods as set out in enforcement agent law.
Possession: Allowing an enforcement agent to take possession of land on behalf of the creditor.
Committal/Arrest: Allowing an enforcement agent to arrest an offender or a debtor under an order of a court and to take him or her into custody.
Access to Information: Allowing enforcement agents to apply for a partial Data Disclosure Order (DDO) to assist with warrant enforcement.
It is our intention that the regulatory regime will embrace all enforcement agents, since exempting parts of the public sector would put at risk the stated policy aims and objectives. An individual who undertakes more than one if not all of these activities could apply for a composite licence.
Compulsory Approval of Authorised Enforcement Service Providers
The approval process and criteria will differ for the public sector, for example they will have to provide appropriate alternative arrangements for insurance, which include Crown indemnity, and the relationship with the Authority's Inspectorate and the guidance on monies and accounts will have to be specific to the public sector's status and role.
We have explored with key stakeholders through the consultation process and subsequent discussions some of the finer detail. As already mentioned the SIA will be given considerable autonomy and would have the final decision in settling the procedures for the regulation of enforcement agents, enforcement companies, professional bodies and training providers. The following paragraphs therefore set out issues we would expect the Authority to consider.
Issuing a Code of Practice
We envisage that the Authority will consider issuing a Code of Practice for Licensed Enforcement Agents, Approved Service Providers and Accredited Professional Associations to be published prior to the implementation of the procedures for licensing, approval, accreditation and authorisation. It will build on the National Standards for Enforcement Agents (May 2002), which has been widely distributed, well received and supported by the industry. It is envisaged that the Authority will issue additional guidance to supplement legislation on a number of issues such as the observance of religious and cultural festivals, goods that should not be removed by enforcement agents, and the enforcement agent's responsibilities to people who are potentially vulnerable.
We expect that in order to obtain the relevant licence, applicants will:
complete an application form;
pay the fee prescribed by the Authority;
provide evidence of adequate training and insurance as appropriate;
hold up to date membership of an accredited professional association;
be committed to working with the Authority and others to improve standards;
declare that they are not an undischarged bankrupt, not insolvent, and not under liability in respect of overdue fines or court judgments;
declare any business interests that could conflict with enforcement work;
pass a criminal record check; and
operate in line with the Code of Practice, in particular balancing duties to the creditor, debtor and the court.
We expect that an applicant for an interim licence will have to undergo the same checks and application procedures as an applicant for a full licence, with the exception of the completion of the training criteria. It is proposed that the regulation will be self-financing through the licence, approval or accreditation fees.
Following on from the criteria suggested for obtaining a licence we expect that to retain a licence, licence holders will:
undertake on-going training to a required standard by an accredited training provider;
follow the Code of Practice issued by the regulatory body for their category of licence;
comply appropriately with requests from the Authority in line with their investigative and regulatory powers;
display an identification card or badge issued by the regulatory body when undertaking their work; and
have their name included in a public register of licensed enforcement agents.
Enforcement Service Providers
In order to obtain approval, we envisage that enforcement service providers will:
complete an application form;
pay the fee prescribed by the regulatory body; and,
be committed to improving standards in the profession;
ensure that all enforcement agents they employ are licensed and complying with the Authority's Code of Practice;
declare any related business interests for the firm/partnership;
comply with guidance and standards set out in the Code of Practice;
act within the limits of the powers given by the current legislation; and
provide evidence of adequate insurance or similar arrangements.
Approved authorised enforcement service providers should, we expect, be required to:
inform the Authority's complaints register of upheld complaints relating to licensed activities against themselves and their licensed enforcement agent employees on request in a form prescribed by the Authority;
ensure that all enforcement agents they employ are licensed or in training and holding an interim licence, and that their employees are complying with the licence regulations;
ensure that all agents, employees and contractors have appropriate training to ensure that they understand and are able to act, at all times, within the bounds of the relevant legislation and Code of Practice; and
be committed to delivering high standards bearing in mind their responsibilities to the court, the creditors and the debtors, in line with the Code of Practice.
In addition, we envisage private sector enforcement service providers should:
Satisfy the provisions in respect of insurance prescribed by the Authority
allow the Authority's Inspectorate to enter their premises and make enquires on request;
ensure that audited accounts are available in an accessible form on request to the Authority's investigators;
ensure that an annual audit of the service provider's accounts by independent accountants is undertaken;
maintain a separate account for monies due to the creditor; and
maintain accurate books and accounts and keep appropriate records for all financial transactions, and make these available to establish monies owed to the creditor (these should be made available in an accessible form to the Authority's investigators when requested).
Approved enforcement service providers will, we expect, be required to have their name and contact details included on the Authority's register, which will be available to the public, and will be entitled to display a 'quality mark' on their literature and correspondence; and operate as firms employing enforcement agents.
We expect that accredited professional associations will be required to:
operate complaints procedures for all of their members in line with the Authority's Complaints Scheme (the functions of which will differ in the public and private sectors);
work in co-operation with the Authority to raise standards throughout the profession and promote best practice;
maintain accurate records regarding their membership, as requested by the Authority;
become an authorised training provider; and
allow the Authority's inspectors access to their operations to prove that they are operating fairly and are balancing accounts.
The accredited professional associations would be able to provide a number of additional services to their members specific to their needs and the sector in which they operate. These could include preferential arrangements for insurance; IT services; access to debt counselling for debtors; corporate membership; newsletters; and providing advice to their members, including legal advice.
Appeals for the non-granting of accreditation could be made to the magistrates' court in a parallel process to appeals for the non-granting of licences and approvals.
Please see the diagram depicting the proposed roles and responsibilities of the Authority under the new licensing regime.
Proposed Roles and Structures under a Regulatory Regime
|Complaints Board||Enforcement Sector Committee (independent of industry)
making recommendations to the Lord Chancellor on fees and legislative change;
issuing a Code of Practice
licensing all enforcement agents;
approving authorised enforcement service providers;
accrediting professional associations
authorising training providers
overseeing a complaints scheme and setting up a Complaints Board;
making investigations; and
maintaining a register
|Accredited Professional Associations
Have a complaints procedure for members not settled by service provider responsible to the Complaints Board
Be an authorised training provider
Co-operate with Authority & have commitment to raise standards
Have open & fair membership
Maintain register of members & complaints
Must not be a direct provider of Enforcement Services
Provide advice including legal advice
Set up/negotiate insurance scheme for licensed agents
|Licensed Enforcement Agents
Keep up to date with training & qualifications via an authorised training provider
Be a member of an accredited professional association
Be committed to working co-operatively with the Authority to improve standards
Provide evidence of adequate insurance
Comply with the Code of Practice
Declare business interests
Comply with the Authority's Inspectorate
Taking legal control of goods
Committal / Arrest
Access to Information
|Authorised Enforcement Service Providers
Ensure all agents are licensed
Be committed to improving standards across the profession
Declare related business interests
Have a complaints procedure for their enforcement agents
Maintain a register of licensed enforcement agents and complaints
Provide evidence of adequate insurance where appropriate
Be open to Authority's Inspectorate where appropriate
|Advisors & Other Service Providers
May consult/work with the regulatory body, but will not need to be approved/authorised by it e.g. solicitors, debt advisors
|Authorised Training Providers
Deliver appropriate training in line with defined standards
Provide other services as appropriate
Government believes that regulation can only work successfully
with a single piece of enforcement law, clearer guidance and an improved fee
structure and that we must make the system easier for all involved - debtors,
creditors and enforcement agents.
It remains the Government's position that the enforcement system in England and Wales permitting the seizure and sale of a debtor's goods in order to settle a judgment debt may always be necessary.
There are two basic principles,
that taking legal control of goods should be an effective machinery in which creditors have confidence, in order to receive payment of monies owed; and
that the machinery should protect debtors from undue economic hardship and personal distress.
The legislation will have a particular emphasis on:
ensuring that there is time for the debtor (or third party) to apply to court to prevent sale of goods;
a consistent list of goods that will be exempt from all types of legal control;
ensuring proportionality between the size of the debt and the sale of goods; and
a clear statement on the systems available to address any wrongful actions by the creditor or the debtor.
Primary legislation will give the Lord Chancellor the power to set regulations:
governing the actions which an enforcement agent uses in taking legal control of goods for a debt;
that will give the Authority the power to set guidelines on an agents behaviour through a Code of practice;
that will set the penalty for a person who wrongfully interferes with any goods taken under legal control;
that will set out the remedies available for irregular and illegal action; and
that detail the particular requirements for taking legal control of goods for the purpose of Recovering Commercial Rent Arrears.
Under these powers the Lord Chancellor will make secondary legislation which will set out regulations for specific actions in taking legal control of goods, as follows:
period of notice required;
information to be given to the debtor;
hours of the day when taking legal control may be undertaken;
entry to premises;
list of exempt items (including how to deal with third party goods, joint property, hired goods and goods purchased on hire purchase terms;
forms of legal control;
model forms of an agreement for taking legal control of goods and inventories;
issues around duration of levy/abandonment/second distress;
sale and payment of goods; and
Commercial Rent Arrears Recovery
It is still Government's position that the current Distress for Rent procedures are not an appropriate or proportionate remedy and should be abolished for residential properties. However, Government believes that enforcement action should continue to be available for use by enforcement agents in commercial properties only, with some additional safeguards, under a new Commercial Rent Arrears Recovery System.
Under primary legislation, the Lord Chancellor will take the power to set out the regulation allowing enforcement agents to collect commercial rent arrears on instruction from landlords of commercial premises.
Secondary legislation, setting out substantial and procedural rules, will be introduced to support primary legislation. New regulations will cover similar issues to those undertaken in taking legal control of goods as any licensed enforcement agent will be able to. For example, minimum period of rent outstanding; advance notice; sale; information given to the debtor; exempt goods and remedies. Secondary legislation will be underpinned by a Code of Practice, issued by the Authority, which will bind the actions of enforcement agents.
We are committed to ensuring that any new fee structure adequately and fairly rewards agents in public and private sectors for the work they actually do, is responsive to the market conditions in which it operates, and encourages prompt payment by the debtor. It will incorporate safeguards against malpractice and exploitation. It will be a structure that is supported by, and inseparable from, regulation of the enforcement services profession and a single piece of enforcement agent law.
The proposals put forward here are founded on a number of key principles explored in the Green Paper and subsequent economic analysis of the enforcement services market. Any new fee structure must:
adequately and fairly reward agents in public and private sectors for the work they actually do;
encourage prompt payment by the debtor;
ensure that debtors who pay do not subsidise enforcement against those who do not;
be sensitive to those debtors who do not have the resources to pay;
incorporate safeguards against malpractice and exploitation;
be supported and monitored by regulation, and
reflect the legal position as enshrined in a single piece of enforcement agent law.
The new fee structure must support the principles of transparency, consistency and proportionality, minimise fruitless activity and promote a sustainable response.
In line with these principles we suggest that a future fee structure should be based on the following sequential components:
an up-front fee;
fixed fees for specific activities and events generated by the enforcement process;
variable fees for specific activities and events generated by the enforcement process.
The aim of the Enforcement Review is to build an enforcement
system in which the most appropriate form of enforcement is used, whether
or not that is a warrant of execution and that, when chosen, enforcement proceeds
on the best possible information, efficiently and effectively.
Our proposals for fee reforms, in particular the introduction of an up-front fee, recognise the professional status of enforcement agents under a new regulatory regime.
The key principles of the enforcement review can best be met by improving the quality and quantity of information available on which to base informed and responsible decisions about enforcement. More and better information will allow enforcement efforts to be targeted towards the procedure that is most likely to produce results for the creditor and make it possible to identify, at an earlier stage, debtors who do not have the resources with which to pay the debt.
Data Disclosure Order Proposal
The Comprehensive DDO
The creditor may apply to the court for a DDO by completing a Court Service DDO application form, lodging the fee, indicating the original case number, and meeting evidentiary and timing requirements in any of the following scenarios, which shall be set out in legislation:
Following a forthwith default judgment: the DDO may be applied for simultaneously with the application for the forthwith default judgment. The DDO may then be granted immediately following the issue of the default judgment;
Following a default judgment: the DDO may be applied for at any point after the issue of the default judgment;
Following wilful non-compliance with the Order to Seek Information from the Judgment Debtor: if the debtor has not responded to this Order the creditor may apply for a DDO as an alternative to initiating the committal process; if the debtor is wilfully non-compliant at the hearing, the creditor may request or the Judge may order a DDO;
Following default on an Instalment Order: after the first instance of default notice must be given to the debtor that further non-compliance may result in an application for a DDO; if, thereafter, the next instalment is defaulted on, provided the creditor supplies evidence, by a statement of truth, that the debtor is two instalments in arrears and due notice has been given, a DDO may be applied for;
Following an unsuccessful Third Party Debt Order (TPDO): if an application for a TPDO fails, the creditor may apply for a DDO using as evidence the original judgment and notice of the failure of the TPDO;
Following an unsuccessful Attachment of Earnings Order (AEO): if an application for an AEO fails, the creditor may apply for a DDO using as evidence the original judgment and notice of the failure of the AEO;
By application on notice to a District Judge: creditors who have an enforceable title, such as a High Court writ, a Tribunal award, which may be enforced through the County Court.
The Data Disclosure Order will provide a viable alternative to the committal process in circumstances where the judgment debtor proves wilfully non-compliant with an Order to Obtain Information from the Judgment Debtor.
The Partial DDO
Once enforcement agencies and their agents are regulated, we expect the regulatory body to issue licenses to obtain and process information. These licenses will be available to enforcement agents who have fulfilled the necessary criteria (to be determined by the regulatory body); they will then be able to apply for a partial DDO, tied specifically to the address of the debtor, in the following circumstances:
Following an ineffective Warrant for Taking Legal Control of Goods: application for a partial DDO may be made by a licensed enforcement agent acting on behalf of the creditor, provided evidence that the warrant is ineffective is supplied to the court;
Following wilful non-compliance with a Warrant for Taking Legal Control of Goods: application for a partial DDO may be made by a licensed enforcement agent acting on behalf of the creditor, provided they supply evidence, by a statement of truth, that the debtor is wilfully non-compliant with the warrant.
An Attachment of Earnings Order (AEO) allows a creditor to secure payment of a debt by ordering the debtor's employer to make regular deductions from a debtor's salary, until the debt is paid in full. The outstanding debt must be over £50 and deductions can be made from earnings, pensions and statutory sick pay, but only after tax and National Insurance contributions have been made. Benefits and tax credits are exempt from an AEO. An AEO is not available if the debtor is self-employed.
In the county court, AEOs are the second most used enforcement procedure following warrants of execution. In 2001, for debt cases, 77,876 applications were filed, which led to the making of 42,011 orders and 30,461 suspended orders. Other AEO processes are in use for Council Tax collection, Scottish debt recovery and Student Loans. The Child Support Agency operates Deductions from Earnings Orders (DEOs) which are a similar process for Child Support payments.
An important aim of the Review is to ensure that distress is not used indiscriminately or disproportionately. If the debtor is in employment, AEOs provide a viable and effective alternative; they allow the debt to be repaid over a period of time, which is less likely to cause the debtor hardship, and may reduce the likelihood of over indebtedness.
Fixed Tables - A new process
The changes proposed will only effect the county court AEO process. This will require making minor amendments to the Attachment of Earnings Act 1971 through primary legislation. The new fixed table process will be set out in secondary legislation and prescribed in procedural rules. Set out below is the basic principles of the process at this stage, and we will continue to formulate the details in conjunction with stakeholders and other interested parties.
The Fixed Table procedure
The proposed fixed table process removes the need for a means form to be completed; once the court has made an order, the employer would be instructed to apply the deduction rate specified in the tables.
Diagram A - From application to full order
text version of Diagram A
Currently, the time from application to the making of an order takes an average 7.56 weeks, and for a Surplus Order, 11.60 weeks if the debtor fails to respond; with fixed tables, the process can be reduced to just over 14 days.
AEOs are an effective enforcement tool and offer a more socially acceptable enforcement option to distress, as they allow the debt to be repaid over a period of time, based on the debtor's ability to repay. The First Phase of the Review identified that the existing procedure has weaknesses and our subsequent work supports this conclusion. It has also enabled us to conclude that the introduction of fixed tables would lead to the following benefits to the AEO process:
Faster - because the Court will no longer require a means form;
Fairer - in most cases the deduction rate will be based solely on the debtor's income and therefore everyone will be treated equally;
Transparent - as all parties will be able to see the proposed deduction rates from the outset;
Consistent - as there will no longer be regional variations on what expenditure is or is not allowed; and
User Friendly - all users, including employers, will have a simplified process.
In order for the AEO procedure to offer a viable alternative to distress the court must have an effective method for ensuring orders are complied with. By creating a tracking system, it is likely that more AEOs will be successful in obtaining repayment of the whole judgment debt. By using IR records, the courts will have the most reliable source of employee details available to enable tracking to work. Any concerns about data sharing are more than balanced by the need for proportionate controlled and appropriate use of information, solely for ensuring enforcement of a court order following wilful non-compliance by a debtor.
A charging order is a means of securing a debt by placing a charge onto the debtor's immovable property, particularly a house or land, although it can also be used against shares. A charging order also allows a creditor to apply subsequently to the court for an order for sale. Charging orders therefore provide a means by which a creditor can gain access to any equity a debtor holds in a property.
Because charging orders need to be legally registered against a property, they are more complex and specialised than some other forms of enforcement. This is likely to remain the case - the Review has identified no significant means by which the charging order procedure should be changed. Registration against the property will therefore remain an essential feature of the process. It is our conclusion that the existing procedure works well in the main. Our recommendations are therefore of a procedural nature, to help the system run more smoothly.
Our proposals can be summarised as follows:
That enforcement by way of charging order should be made available in cases in which the debtor is not in arrears with an instalment order.
That debtors who are the subject of a charging order, who have been keeping to the terms of an instalment order and who believe they would be unduly prejudiced against when selling their property, can ask the court to look at their circumstances and consider whether the charging order should be removed to allow the sale to take place.
That the Lord Chancellor be given, in primary legislation, the power to set, by way of secondary legislation, financial and / or procedural limits for enforcement by way of charging order in the future, should circumstances necessitate.
That orders for sale be retained.
It remains the Government's position that responsible creditors who are owed money and have gained valid judgments through the County Court should have the right to enforce that judgment by the most appropriate means available. The White Paper includes proposals that form part of a comprehensive package of safeguards providing protection to vulnerable debtors. The Lord Chancellors Department and the Department of Trade and Industry continue to liaise closely on the planned reforms of the Consumer Credit Act . In our view it is by tightening up the Consumer Credit licensing procedure and by tackling unscrupulous lenders at source that many of the problems identified by the debt advice sector will be solved.