| 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. |
271. This chapter sets out the arguments and legislative changes necessary for the proposed introduction of a new court procedure to obtain access to information to assist with the enforcement of judgments - the Data Disclosure Order (DDO).
272. The Green Paper consulted on a two-stage procedure determining access to information, the first being available to the regulated enforcement agent and the second being an expansion of the current court-based Order to Obtain Information from Judgment Debtors (previously the Oral Examination procedure). The Green Paper considered access to information in the context of proposals to regulate enforcement agents, and sought views on a number of sanctions governing access to, and use of information by, enforcement agents.
273. Most of those who responded to the Green Paper favoured the concept of the DDO and the proposals have been further developed with assistance from the DDO Working Group, whose membership is drawn from Government Departments, creditor organisations, the advice sector and the judiciary.
274. Although not an enforcement method itself, the DDO will seek information on the judgment debtor who has failed to respond to the judgment or comply with court-based methods of enforcement. Information will be sought from relevant third parties in both the public and private sectors, to help the creditor make an informed choice about how to enforce a judgment. The DDO is similar in principle to the Order to Seek Information from the Judgment Debtor but will not rely on the attendance or compliance of the debtor at a court hearing.
275. 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 contraventions of the Data Protection Act 1998. The DDO, being an order of the court, places a clear legal obligation on the parties to disclose information. The Data Protection Act states that disclosure may be made without contravention of the Act where required by law, including an order of the court. The DDO therefore raises no difficulties with data protection.
276. We have also considered the DDO in the context of ECHR. Article 8 of the ECHR establishes the right to privacy; however, it is a qualified right, and the DDO operates under one of the justifications for an interference, in this case the rights of the creditor. The test to be met under Article 8 is therefore one of proportionality. To be proportionate, disclosure should be limited to the minimum required. The relevant and/or the minimum information to be disclosed and what goes beyond it will be made clear in legislation, rules and practice directions, as will the evidence required to necessitate judicial intervention. Measures will be put in place to minimise the danger of abuse by creditors, those acting on their behalf, or the third parties who are to supply the information. Finally, the debtor will have the right to apply to the court to set aside either the judgment or the DDO at any point, thereby ensuring that the process is open to legitimate challenge.
(i) The Application Process
277. The DDO will be an order of the court, applied for by the creditor or, in limited circumstances, by a licensed enforcement agent who is acting on the creditor's behalf. It will operate as outlined below. (See also Flowcharts A, B & C)
278. 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:
| The DDO 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. |
279. Primary legislation should also make provision for other forms of enforceable title to be added to this list.
280. Once enforcement agencies and their agents are regulated, we expect the regulatory body to issue licences to obtain and process information. These licences 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:
281. An application for a DDO following a default judgment will not proceed if there is any evidence on the court file to rebut the presumption of successful service by first class post. The DDO would not be available to the creditor if, by the time the application is received, there is evidence on the court file of non-service of claim. If there is such evidence on the file, the court will return the DDO fee to the creditor and notify them that service has not been successful and that an application for a DDO has been rejected.
282. What constitutes wilful non-compliance will be set out in secondary legislation, and may be supported by guidance issued by the regulatory body. If there are any doubts of the extent and validity of the supporting evidence supplied in options detailed in paragraph 278 and both options detailed in paragraph 280, court staff will refer the matter to a District Judge for determination.
(ii) The Form
283. The DDO form sent out by court staff will contain information on the debtor taken from the judgment form including name, address, and an identifier number that relates to that particular judgment/DDO and, where possible, telephone number, National Insurance number, and date of birth. The bottom of the sheet will have the address of the court at which the application was made and to which the completed forms should be returned.
284. Third parties should have a tick box at the top of their sheet, indicating or confirming which body they are. Each sheet should then have a series of question and answer boxes, requesting information relevant to future enforcement, e.g. name, address, details on employment and bank accounts. A draft form may be found at Form A.43
285. The option of 'New Address' (contained in box C of the draft form) should be ticked if the address supplied by the court is held on the Department for Work and Pensions (DWP) computer system as an old address for the person named on the form. The debtor's new address should then be recorded on the DDO form.
286. The option of 'Variant Address' (contained in box C of the draft form) should be ticked if the DWP computer system holds an address that is not an exact match with that supplied by the court but bears a substantial likeness. The different address recorded on the form will therefore be that of a person with very similar identity and locational details.
287. If either of these boxes is ticked the DDO should be referred to the District Judge for determination (see below).
288. Box F, relating to bank account details, should only be completed by private sector third parties. We do not envisage, at this stage, seeking such details from government departments or their agencies.
(iii) Processing
289. Once the DDO application, the appropriate fee and the necessary supporting evidence have been received by court staff, and they are satisfied that the application may proceed, they will log the application on to the Court Service's electronic case management system (currently CaseMan). If the application requires judicial determination it will be passed to a District Judge and, if granted, then logged onto the system in a similar manner. If the application is rejected, the creditor will be notified and the fee refunded.
290. Once it has been logged, the system will record the DDO as an event, and link in to the existing diary management system, which will flag up when the DDO was issued and generate triggered warnings for subsequent events in the processing path, e.g. return dates for information from third parties. At present it is not envisaged that the forms for a DDO will be generated by the court's IT system, nor will the subsequent information interchange be conducted electronically with all third parties. Instead, the DDO forms will be taken from pre-printed pads issued to each court, bearing address and contact details for the court in question, and information will be interchanged manually on paper forms. However, depending on the volume of DDOs issued in the future, it may become viable to have an IT-generated system, in terms of issue, management and response.
291. A copy of the form will be sent by Court Service staff to those of the third parties from whom information will be sought in a manual format. Where the DDO proceeds manually, paper copies of the form will be sent to a predetermined central point for each organisation, who will process the form in accordance with an agreed protocol and Code of Practice. Any relevant information, or notification that no information has been found, will be copied on to the form and returned to the originating court within the agreed timeframe.
292. When the forms have been returned to the court by all the third parties, the designated Court Service officer will assess the information retrieved. If there is a nil return from all sources, the court will send notification to the creditor or licensed enforcement agent to this effect. If information has been received, Court Service officers will retain it and inform the creditor or the licensed enforcement agent that information is available for any or all of the enforcement processes and will be released to them upon application for the relevant mode of enforcement. As mentioned above, if either of the boxes relating to new or variant addresses is ticked, court staff should refer all documents held in relation to the DDO to the District Judge for determination on whether the process should continue.
(iv) Third Parties
293. The third parties from which information will be sought have been selected because they hold information that will enable subsequent enforcement action. It is proposed that legislation will provide for gateways between the county courts and DWP, Inland Revenue, financial institutions, and credit reference agencies in the first instance, and make provision for further bodies to be designated in future, should circumstances warrant it.
294. The DDO will proceed by pre-determined pathways, the details of which are set out below. Whether the DDO proceeds through all of the stages will be an option available to the creditor in limited circumstances. In cases where the licensed enforcement agent applies for the DDO, the pathway will be restricted to ascertaining address details from DWP to enable the warrant of execution to be reissued.
295. If the DDO arises from a creditor application, the court will send the DDO form to a central processing point at DWP and contact the credit reference agency through an electronic link. DWP's Central Fine Defaulter's Unit (CFDU) already processes applications for up-to-date information on fine defaulters' whereabouts from Magistrates' Courts Committees (MCCs) under the package of measures introduced when the responsibility for warrant execution was transferred from the police to MCCs. We propose to expand the capabilities of the existing unit, rather than introduce a new unit dedicated to processing DDOs, as this offers the best use of resources within the justice system and DWP, and concentrates the existing expertise. We propose that staff at CFDU will access DWP's Departmental Central Index (DCI) which holds information on whether people are claiming benefits, what benefits they are claiming, and what address they are claiming from.
296. If the DDO arises from an application by a licensed enforcement agent, the DDO will only be sent to DWP. Once the DWP's search of their index has been completed this is the point at which the search for information will cease, and the DDO will be returned to the court of origin.
297. If the DDO arises from an application by a creditor, once the form has been processed by DWP, and if a National Insurance Number has been obtained during that search, the CFDU will pass on the DDO to Inland Revenue to seek information from them on employer details. This will enable a future AEO application, should that be the creditor's choice. CFDU will send a request to Inland Revenue for data, which shall be processed by Inland Revenue in accordance with an agreed protocol and Code of Practice. Only information relating to a debtor's employer will be sought from Inland Revenue. Once that information or a nil return has been provided by Inland Revenue, the completed DDO will be returned to the court of origin.
298. The DDO will also seek information on the debtor's financial assets - a bank or building society account - in order to facilitate a Third Party Debt Order, should that be the creditor's eventual choice of enforcement action. There are two possible pathways for obtaining this information.
299. The first is to contact the financial institutions directly, with Court Service establishing an agreed contact with all of the banks and building societies on an individual basis. While it would be desirable for the DDO to be sent to a central point for handling, the British Bankers Association (BBA) indicates that this is not possible, given that the main banks hold only around 60-70% of all accounts, with smaller banks, building societies and Internet banking companies comprising the remainder of the market share. The possibility of establishing email contact is also being considered in this context.
300. Such a process would be both costly and time-consuming. Furthermore, targeting all the financial institutions (the BBA estimates there are currently between 40 and 50 players) would result in nil returns in approximately 98% of cases, which could undermine confidence in and compliance with the process, as the DDO could be seen as an order to conduct a fruitless search.
301. The second method of accessing financial institutions is to create a conduit to banks and building societies through credit reference agencies.
302. Credit reference agencies hold a significant amount of personal data. Whilst the State has moved tentatively towards increased data sharing over the last 20 years, credit reference agencies have accrued a vast archive on the movements, habits and financial history of individual citizens. In recent times, their business has become increasingly intertwined with public sector service delivery.44
303. Credit reference agencies hold the following forms of information which are pertinent to the DDO: name and date of birth of those who reside at a particular property, as well as financial information held in a 'pool' on behalf of the high street banks and other financial institutions. Credit reference agencies therefore seem best placed to provide the financial information required by the DDO. However, it should be noted that since their records are focused on financial products of a credit-based nature, records on current accounts remain incomplete. One major credit reference agency estimates that they have current account information in 50% - 90% of their files.
304. Credit reference agencies could process the DDO by establishing a form of IT link to the courts, either by secure web access or an ISDN line. The credit reference agency could then respond to a request for information on those financial institutions with which the debtor has a relationship, collating all the information and returning it to the court (electronically), so that the court can then send the DDO to a select and targeted group of banks and/or building societies. The degree of information that could be provided, down to branch and account details, varies between the companies.
305. If this path were taken, the cost would be substantially reduced, with a one-off infrastructure and system cost for all courts plus minimal search costs for each DDO hit.
306. If information is returned to the court, the court staff will alert the creditor or the enforcement agent of the existence of the information. They will not release the information directly to the creditor. This is to limit the improper use of the information and to ensure that the information obtained for the purpose of enforcement is so used, thereby upholding the principles of the Data Protection Act.
307. Notice of the result of the DDO should be sent to the creditor or the licensed enforcement agent in a form indicating which enforcement options could be facilitated by the DDO, should the creditor decide to apply for them. A draft form may be found at Form B.
308. If the creditor decides, on the basis of the DDO, that they wish to pursue further enforcement action, they should make application to the court indicating the desired enforcement option and lodging the appropriate fee. Court staff will then transfer the information obtained from the DDO onto the relevant enforcement forms and process them as they would if the creditor had made the application in person.
309. Alternatively, if there is a nil return, the creditor or licensed enforcement agent should be informed that the DDO did not discover any information to enable enforcement to be undertaken. In such circumstances the DDO application fee shall be retained by the court.
310. Both the claim form (N1) sent to the debtor, and the judgment form (N30) will bear a notice indicating that failure to respond may result in the creditor applying for a DDO. The debtor will therefore have received notice of the potential consequences of inaction and non-compliance with an order of the court. Court Service will be responsible for modifying existing forms to contain this notice.
311. It will also be the duty of third parties from whom information is sought to notify those who provide personal details to them in the first instance, that in the case of non-compliance with an order or judgment of the court, their information may be accessed by a DDO and used for enforcement action.
312. Those third parties from whom data will be sought will need to comply with the requirement of the Data Protection Act in relation to standards of data quality and accuracy.
313. Information obtained by the DDO will be kept by the Court Service for a maximum of three months, in order to ensure that there is sufficient evidence to meet claims by the creditor as to receipt of the information. After the prescribed period it will be destroyed.
314. As stated in the Green Paper, where information is passed to licensed enforcement agents, they will be subject to strict regulation and control. They will be subject to penalties for misuse of such information, with prosecutions to take place under civil enforcement legislation or the Codes of Practice established by it rather than Data Protection legislation. A regulatory structure governing the activities of enforcement agents should have inspecting and monitoring powers, with clear penalties and complaints provisions, to ensure data protection compliance by enforcement agents.
315. Clearly drafted Codes of Practice will govern the handling and supply of information sought by the DDO.
316. We estimate the costs for a full DDO to be in the region of £100-£150, with a partial DDO available to the licensed enforcement agent being in the region of £75, which reflect the costs incurred by those third parties supplying the information. We envisage that those third party costs will be met by a transfer of funds. The costs of subsequent enforcement action undertaken on the basis of the information gained from the DDO will not be affected by the charges related to the DDO process. It is proposed that the creditor will pay the costs of the DDO at the point of application, but this will be recoverable from the judgment debtor when enforcement is successful.
43 These forms are included for illustrative purposes only. The details of the DDO form will be worked out more fully through further discussions with Court Service and the third parties from whom information will be sought
44 For example, different credit reference agencies have contracts with the Cabinet Office to supply the digital certificate authentication technology for the Government Gateway, the Department for Work and Pensions in order to supply information as part of the Social Security Fraud Act, and Inland Revenue to provide a link for pursuing fraud, tax evasion and for the recovery of debt