Ascent Legal [1], one of the UK’s leading specialist recoveries law firms, has raised objections to the proposed Pre-Action Protocol (PAP) changes for consumer debt claims, stating a transparent debt rehabilitation focus is already high on the agenda for lenders.
The motive behind the recent PAP shake-up, put forward by the Civil Procedure Rules Committee (CPRC), is to reduce the number of consumer debt cases resulting in litigation action.
New PAP proposals include:
- Lenders provide a statement of account and copies of the contract for each new claim. The statements have to show all payments received, charges and interest calculation.
- The defendant be allowed 28 days within which to seek debt advice.
- The requirement that Alternative Dispute Resolution be considered prior to claim.
Consultation on the changes ends on the 30th September 2014 and, if successful, would come into effect from 2015 onwards.
Myra Scott, Ascent’s head of legal, said: “The CRPC’s desire to reduce consumer debt claims that lead to legal action is positive. However, based on our own extensive data, the majority of customers (c35%) respond to our pre-legal Letter Before Action meaning no further action is required, with another 35% responding to a claim. In fact, just 2-5% of customers actually go on to dispute and defend their claim. With so few doing so, we feel the scale of the desired changes are unnecessary and do not reflect the existing strong evidence of pre-legal outcomes.”
Myra added: “We are aware that lenders are keen to be transparent and to resolve matters without need of litigation. We feel the existing voluntary codes and obligations are sufficient. Further, due to requirements under Consumer Credit this could lead to unnecessary delays which will make the problem harder for the customers to deal with. If an extra requirement to produce full statements from inception was added this would lead to unnecessary costly administrative burdens.”
Ascent is one of the largest users of the civil courts in recovery of debt for financial institutions. It achieved a turnover of over £10m in 2013/14 and has plans in place to nearly double this during the next three years. Beyond legal services, Ascent has experience across other major areas of debt recovery including collections, mediation, field services, and enforcement.