Chapter 5: Fees
5.1 The complexity, scope for exploitation in and inadequacies of the existing fee structure, and the need for radical change have already been recorded in detail elsewhere53. This Paper does not seek to cover them again. The problems with the current scales are well known to those in the industry, to major creditors and those who advise debtors, and there is no statutory scale of fees at all for the execution of distress warrants in the magistrates’ courts. Smaller creditors and many of those facing up to the reality of debt will be unaware of how the current charges operate until, and unless, they become involved with them. The Government is committed to ensure that any new structure, or fee scales within it, does not simply replace one bad system with another.
5.2 In his Independent Review of Bailiff Law Professor Beatson considered the issue of fees (statutory charge scales) in some detail. It is not proposed to discuss the same issues at length here, but instead to move the debate on with some broad proposals on fees, to be considered in the light of the proposals for a regulatory framework set out in Chapter Two and in Annex D.
5.3 Brief details of the existing fees are included as part of Annex C which sets out the current arrangements for bailiffs. An extract from Professor Beatson’s consultation paper, in which the statutory charges were explained and questions posed, is attached as part of Annex B. We have also been considering the responses received which Professor Beatson made available to the Review. It is relevant to note here that the scope of this Enforcement Review was broadened following Professor Beatson’s Report54.
5.4 Professor Beatson concluded that "this issue is so closely connected with the regulation of bailiffs that it is not possible to make recommendations without knowing what the regulatory framework is to be"55. However, he did set out three points which emerged from the consultation process:
5.5 Professor Beatson’s view was that any fee scale must be suitable for a wide range of debts. It is worth noting here that it is not only the type of debts which vary but also the nature of the relationship between creditor and enforcement agent and there are a range of factors involved, as indicated in Chapter Three. The relationship may be purely contractual, as in the private sector, or may take the form of a service provided by the public sector. Issues affecting either relationship include the type and size of the debt, the volume of similar work undertaken by that enforcement agent on behalf of the same creditor or others with similar needs, the type of enforcement agent action required, the circumstances of the debtor and creditor, and the amount of information the creditor can provide.
5.6 The Government wants an enforcement system which is effective, fair and uses appropriate methods of enforcement. We have identified that the structure for enforcement needs to be better able to respond to change in the future. Our proposals for an effective, independent statutory regulator with the powers to raise standards, increase professionalism, require training, monitor performance and impose penalties will ensure creditors receive a high level of service and protect vulnerable debtors. Against this background of proposed firm regulation and clear responsibilities, we can make proposals in respect of the powers that enforcement agents should have now and may have in the future. In the light of all these proposals it is appropriate to give some consideration to the vitally important issue of enforcement agents’ fees.
5.7 We in England and Wales are not alone in recognising the need for change in our enforcement system. Neither are we alone in recognising a need to address the complexities of the bailiffs’ fees:56 much work has already been done in Scotland which could inform a more detailed consideration of the fee scales when these are addressed in detail. However, the same commentator also indicated that: "Bailiff law in England and Wales is in need of urgent reform, root and branch."
5.8 It would therefore seem appropriate, as Professor Beatson and others have clearly indicated, to seek views on the proposals in this Paper in respect of a regulatory framework and powers, before addressing the detail of fee scales. It is desirable to do so in the light of clear proposals about the broad principles to be applied to fees and how these might be delivered.
5.9 For its strategic vision to be achieved and effective, fair and appropriate enforcement delivered, it is the Government’s view that the general principles governing enforcement agents’ fees should be set out in primary legislation; alongside the powers necessary to enable the regulator, after consultation, to propose clear fee scale(s), to be set out in secondary legislation by the Lord Chancellor.
5.10 Views are sought on the following principles, and/or any additional suggestions, that the Government proposes should be set out in primary legislation:
| Fees should only be chargeable for a provable enforcement activity or expense connected with it; |
| Fees may be based, in whole or part, on the value of the debt or the value of goods seized or sold or proceeds of sale; |
| Fee scales should be transparent and enable debtors to understand their potential liabilities; |
| Fee scales should be published and provided to the debtor; |
| Fees between enforcement agency and creditors should be subject to negotiation and contract, but no fee shall be recovered from the debtor outside the statutory scheme. |
5.11 Legislation will provide, or the regulator will ensure that:
5.12 A detailed approach to the specific scale or scales required is difficult, given the variety of enforcement business, but will be considered further in the light of the proposals set out in this Paper and the responses to them. In particular, the regulatory structure would be expected to deal with most situations of potential abuse or exploitation by making certain activities incompatible with the role of an enforcement agent, raising the level of professionalism and ensuring adequate safeguards are in place. Fee levels alone are not an appropriate means of regulating behaviour.
5.13 Statutory charge scales are laid down for almost all types of distraint, and as much uniformity as possible is desirable57. On the one hand it is difficult to argue that different fee scales should apply to broadly similar work, on the other, as Professor Beatson and others indicate, the type of debt, in particular whether public or private in nature, is a factor. There may be arguments for more than one fee scale — perhaps one for public and one for private debts reflecting their different nature and relative importance to society. Existing arrangements for enforcement agents distraining for magistrates’ court debts are not laid down in statute but should be fixed by a contract between the enforcement agent and the particular MCC.
5.14 In addition to the three key points which Professor Beatson listed in his Report and which are set out above, the following points have emerged from his work and the responses received, or in the recent debate that followed:
5.15 There are a number of questions which could be used to inform further work on fees:
Q.30 Should the fee be a standard amount, or reflect the amount of the debt or the value of the goods seized? Or be a mix of both?
Q.31 Should fees reflect the time taken to do a job or, perhaps more appropriately in the light of the proposed new regulatory structure and increased professionalism, the responsibility involved?
Q.32 Should debtors in remote areas be cushioned from the high cost of travelling to them?
Q.33 Should there be a fixed fee for making an inventory, or removing goods, or should there be an element based on an hourly rate?
Q.34 If more than one call is required to the same debtor in order to, for example, serve the enforcement notice, how should this be remunerated (e.g. Scottish approach — after first call, later calls at 50% of original fee)?
Q.35 A similar problem exists in relation to the call by an enforcement agent to remove property. If the enforcement agent cannot enter the premises on a first occasion to remove the property, how should subsequent visits be remunerated?
Q.36 Should fixed fees be increased for unsociable hours (e.g. Scotland: addition 331/3% if procedure takes place between 5—10pm; additional 75% if procedure takes place on public holidays or weekends (where authorised))?
Q.37 Some legal systems also allow the enforcement agent to negotiate a fee with the creditor for any work that is unusually time consuming (e.g. if the agent has to be on call to deliver an urgent document). This fee cannot be passed on to the debtor. Would this approach be desirable?
Q.38 Should an enforcement agent be able to charge for enquiries, and if so should this be a fixed fee? Or on a time basis? Or negotiable as above?
Q.39 Is it necessarily inevitable (or morally acceptable), that debtors who pay subsidise enforcement against those who do not?
Q.40 Are there economies of scale that can be realised in some forms of high volume work where a specific task is required? E.g. where the creditor has, or could have, ongoing contracts with the enforcement agent and can provide fairly reliable information about the debtor?
Q.41 Should an up-front nominal fee be charged to cover basic action irrespective of the amount, followed by an ’ad valorem’ element to provide an incentive to the enforcement agent?
Q.42 Should it be permissible for creditors to use county court bailiffs as an address-checking agency? Should creditors be required to try reasonable means of obtaining the information first or, in the case of large businesses, be expected to use other types of enforcement agents?
Q.43 It has been suggested that magistrates’ courts should be able to reclaim the costs of executing a warrant of arrest or commitment from the amount reclaimed from a fine defaulter. Should courts be able to add on such costs?
53 Beatson, Review, and Report of Phase One.
54 See Chapter One.
56 Bailiff Fees: Scotland’s Blueprint for Reform, by Philip Evans, Civil Justice Quarterly, 18 (1999).
57 The extract from Professor Beatson’s Review included at Annex B identifies these.
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