Although the Pre-action Protocol (PAP) for debt claims won't be implemented until 1st October 2017, compliance with this will prove a challenge for some, so you should prepare for this now.
Following a meeting in December 2016 of the Civil Procedure Rule Committee (CPRC), the Master of the Rolls and representatives of the Civil Court Users Association (CCUA)*, it has been confirmed that the Pre Action Protocol for Debt Claims will be implemented on 1st October 2017 in England and Wales.
Compliance with the Pre Action Protocol will undoubtedly prove a challenge for some of you, bearing in mind that the requirements are designed to apply to a wide range of debts, not just the relatively sophisticated and regulated debt that you may deal with.
The Protocol will apply to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader). This Protocol does not apply to business-to-business debts unless the debtor is a sole trader.
One important part of the new protocol has been decided by the CPRC, in that there will be no requirement for the original loan agreement/contract to be sent at Letter Before Action (LBA) stage.
There will be a requirement for you to make it clear in the LBA itself that the customer has the right to ask for documentation, including the original agreement/contract, although it was accepted that this should not be so prominent as to encourage spurious requests. There is also an additional requirement for you to include the latest statement of account, a template information sheet and reply form in all cases.
It was agreed that the new Standard Financial Statement will be used as part of the protocol. The statement requirements provide a number of alternative approaches in order to provide some flexibility, depending on your processes.
As advisors, we will make all necessary changes to our letters in due course to ensure we adhere to any regulatory requirements. There may be some requirement for you to amend your internal credit control letters and we can advise you if you are required to make such changes. A general review of your internal credit control letters is something which you should do periodically and we can provide advice in terms of content and compliance.
There will undoubtedly be some provisions with which creditors or the debt advice sector may not fully agree, however we believe that the CPRC and CCUA have arrived at the best compromise possible in all the circumstances, and a much better solution for all parties than the original draft Pre-Action Protocol which was too onerous on creditors.
If you require any further information on this, please contact a member of our recoveries team.
*Wilkin Chapman LLP are members of the Civil Court Users Association