CRAR Enforcement Reforms
Posted on 20th July 2015 at 17:19
1 Year Post Implementation Review
The Certificated Enforcement Agents Association has been asked to comment on the implications of the operation of the Tribunals Courts and Enforcement Act 2007; in this document we have restricted our observations to the consequences of the legislation on Commercial Rent Arrears Recovery Action.
The Association was incorporated in December 2014, with the object of providing a democratic organisation to represent the interests of Certificated Enforcement Agents and others involved in the enforcement process and through education, improve their academic, business and practical skills.
We have a number of our members who specialise in the collection of Commercial Rent Arrears and have canvassed their opinion.
1. Has the overall debt rate risen, fallen or stayed the same since the reforms (April 2014)?
Yes, the number of instruction from clients has risen as Tenants become aware that they can withhold payment of rent until they receive the Enforcement Notice. A number of our members report that some tenants are beginning to use this as their normal method of payment.
2. Are cases settled at different stages? For example, are more cases settled at compliance stage than before?
Difficult to answer as there was no compliance stage prior to April 2014.
3. For 1 and 2 above, are there any differences by debt stream or by debt value?
Debt value has decreased because it is not possible to collect Service Charge or Insurance, even when such charges are reserved as rent. The number of instructions has increased as Tenants become aware of their ability to delay payment and the Compliance Stage fee is no deterrent.
4. Do you collect complaints regarding the enforcement process or behaviour of the agent you use? If so, have there been any changes to the type/number of complaints received?
Yes, the Association monitors complaints against its members and has a Code of Conduct and disciplinary procedures. We have not experienced any changes to the number of complaints. The most noticeable change is in complaints about the interpretation of the wording of the Notice of Enforcement. It gives the impression that the debtor can enter into a repayment schedule that exceeds the time scale allowed by the Compliance Stage. We as Enforcement Agents have a duty to our client (the Landlord) and we believe that to enter into repayment schedule without the security of a Controlled Goods Agreement is not in the Landlords interest.
5. Has the new training and certification process caused any problems to the enforcement agents you use? If so what were they?
The level 2 NVQ is not we believe a reasonable benchmark for Enforcement Agents involved in CRAR it requires no knowledge of the insolvency act, company law or even a working knowledge of landlord and tenant legislation. We are of the opinion that a new qualification should be developed at level 3 or possible level 4 for Enforcement Agents involved in CRAR, as this is undoubtedly a far more complicated area of enforcement than the collection of Council Tax or Road Traffic Act debt.
The new certification process is unnecessarily complex especially where the Enforcement Agent is applying for the renewal of a certificate.
6. What is your policy regarding vulnerable debtors.
We expect our members to comply with the National Standards for Enforcement Agents.
7. Are the reforms placing any new additional burdens on your area? If so what are they and can you quantify them?
The prescribed forms are overly complicated and repetitive; it would not be difficult to simplify the forms without detracting from their effectiveness.
Banking and administrative costs have increased especially due to the Compliance Stage.
The Taking Control of Goods (Fees) Regulations 2014 cover court fees for applications but not Solicitors costs or compensation for the Enforcement Agents time, unless these are treated as Exceptional Disbursements. This needs clarification.
The requirement to serve the Notice of Re Entry by hand places an unnecessary financial burden on the Enforcement Agent, if the Notice of Enforcement can be served by post why not the Notice of Re Entry.
The requirement at sale stage that the Enforcement Agents give a valuation of the goods removed is unnecessary, it must be remembered that the Enforcement Agent is not qualified to give a valuation and the Auctioneer is hardly independent, previously the debtor could instruct an independent valuer if required and at their expense, we see no reason that this could not be reintroduced.
8. Are the reforms providing any new benefits for your area? If so what are they and can you quantify them.
The only benefit we can identify is the fee structure; however it is difficult to see why CRAR fees are the same as that for Council Tax and Road Traffic Act Debt when by its nature CRAR is closer to High Court Enforcement. It would be beneficial to have the option of the second stage enforcement fee as we believe the present structure gives an incentive to move to the sale stage before it is necessary.
9. Have there been any other consequences of the reforms not covered in these questions?
The ability not to be able to collect Service Charge or Insurance when reserved as rent is causing confusion. Landlords are relying on their ability to allocate monies received to Service Charge or Insurance on a basis of age of invoice, therefore leaving pure rent outstanding.
The restriction on the ability to use CRAR at a demise that is residential in part is not logical; Enforcement Agents have always in these circumstances restricted action to the commercial part of the property. One of the unintended consequences of the abolition of this right is that Landlords, especially those of licensed premises, automatically seek possession, therefore leaving the tenant homeless as well as unemployed. This was surely not the intention of this legislation.
The requirement that the instruction to the Enforcement Agent be signed by the Landlord should be amended to include his Agent or his Solicitor.
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