The risks of long term frozen statutory enforcement fees

By freezing statutory enforcement fees for nearly a decade, risks increase rather than reduce – it is now time to act.

The Taking Control of Goods (Fees) Regulations came into effect on 6th April 2014, introducing both a Compliance Stage and a single charge for all Enforcement Stage activity.

The long-frozen statutory fees that had been in place prior to the 2014 reforms had been cited as contributing to increased economic pressure on enforcement agents. The independent economist appointed by the Ministry of Justice in 2009 to review the enforcement fee structures had been clear that:

‘To maintain the ongoing relevance of the Fee Structure, between any major reviews such as the current exercise, the level of fees should be adjusted annually to track inflation.’

Responses to the February 2012 consultation on ‘transforming bailiff action and providing more protection against aggressive bailiffs’ evidenced widespread stakeholder understanding of, and support for, periodic inflationary uplifts to the statutory enforcement fees:

‘The majority of respondents agreed that the costs structure should be updated to take account of inflation prior to implementation and should be updated annually by indexing to a measure of inflation.’

Consistent with the economist’s recommendation and stakeholder views, the Explanatory Memorandum to the Taking Control of Goods (Fees) Regulations 2014 set out an annual inflation review and implementation mechanism:

‘It is the Department’s intention to review, annually, the fees set out in the Schedule. This will take place following the publication of the CPI figure for each September. The April 2012 fees and CPI figure will be used as the baseline each year. The baseline fees will be uplifted with reference to the most recent September CPI figure.’

The success of these measures is evidenced by the fact that ten million court orders have been processed without adverse media comment by CIVEA members in the last three years. Given the nature of the work and the sensitivity of the pandemic, this is an achievement that its members are rightly proud of.

CIVEA and its members also responded to the pandemic by proactively reaching out to the Centre for Social Justice in the summer of 2020, and to the debt advice sector, to suggest the creation of a non-statutory, independent oversight body that would be funded by the industry – and this has since resulted in the creation of the Enforcement Conduct Board, which has the widespread support of all stakeholders.

Enforcement is a sensitive process that is rightly subject to scrutiny. That does not mean, however, that the statutory fees should remain frozen, as that would increase systemic risks rather than reduce them.

Clarity on uprating statutory enforcement fees for the first time in nearly ten years would help long term funding discussions with the Enforcement Conduct Board to conclude, which would then help the Enforcement Conduct Board to become fully operational prior to the Ministry of Justice reviewing progress within the twoyear timeframe it set out in the spring of 2022.

It would also reduce economic pressures faced by individual enforcements resulting from a combination of long frozen fees and the rising cost of living.

CIVEA members would also then be able to make investment decisions and to obtain external funding – both of which are needed to make ongoing investments in raising standards.

Over the course of nearly a decade, there has not been any uprating of the statutory fees to reflect inflation, which has eroded the economic value of the statutory fees by a quarter. By contrast, enforcement fees in Scotland have risen to reflect inflation five times since the start of 2013, and are expected to uprate again this year. HMCTS’ own court fees increased to reflect inflation in 2021, and were backdated to August 2016. Enforcement of unpaid court orders in England & Wales is the only service to have its fees frozen for so long.

The modern warrant recovery process has significantly evolved and professionalised since 2014. 40% of all warrants paid are now obtained without sending an enforcement agent at all. When agents do visit, it is today rare for them to remove goods. Body worn video cameras have also been introduced and are now mandatory.

The reduction in reputational risk was reinforced by the industry’s response to the pandemic. CIVEA members proactively took a wide range of measures to ensure that customers (debtors) were engaged with sensitively.

Gareth Hughes Enforcement Expert