In Focus Consumer Credit
Left-right: Matt Henderson; Graeme Brown; Ronnie Murison; Simon Nolan; Stephen Cowan >>
you to go ahead with an action unless you can provide certain additional
information. We do, of course, advise our clients on this. However, it is a good example of the lack of consistency in the rules that a given court may not proceed a case without a particular piece of information.
MF: Our primary objective is to engage with the domestic customers, to get them to speak to us, in order to work with them on repayments. It is to split our base into the ‘will pay’ and ‘won’t pay’, and also those who have vulnerabilities; so the ‘will pays’ engage, those with vulnerabilities are offered support, and you identify those who do not want to pay. The next phase is to use credit reference agencies and collections agencies to further seek that engagement with ‘won’t pay’ customers, but finally we will come back to litigation. At that stage, the Simple Procedures is an option, but we still press for debtor engagement one last time. We try to use uncomplicated ‘pre-lit letters’ to get engagement, reserving the PAP or Simple Procedure activity until later, so we do not have to spend time where it is not needed. Those pre-lit letters explain that ‘I am a paralegal, can you talk to me, I do not want to go down this road, but it is on the table, so can you just please talk to me’. To actually go to litigation is resource intensive, and we have to manage the impact upon us.
SCR: Some of the most interesting debates we are having at the moment, in Scotland, are over pre-payment meters. These can be very effective for people who are having to manage on low budgets, in terms of keeping on top of their energy spend. Once the majority of customers have moved over to smart pre-pay, suppliers should be able to
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eliminate any differential between what they charge customers, who pay through direct debit, and those who have a pre- payment meter. And, as they will be able to top up from their homes, as opposed to having to go round to the corner shop. Any perceived stigma, or inconvenience, from having a pre-payment meter will be removed. Some people in government – in Scotland as well as England – seem to think that pre-payment meters are inherently bad, and they are unsuitable for vulnerable customers. I think that is wrong. On the whole, they are a good thing for many people, as long as there are safeguards in place to ensure that people, who have no money to put on their accounts, get the support they need.
MF: People are used to the pay-as-you-go concept for mobiles, and, as you say, being able to top up smart meters from your telephone might eliminate any cost differential. In terms of enforcement, on 8 January, we had the warrant price cap come in, so we are now not allowed to charge a customer more than £150 in any
one given year, in terms of warrant costs, as we look to enforce under the Rights of Entry Act. We have long stopped from using warrants to disconnect, rather to access the meter and to fit a pre-pay meter, but it costs us more to do so than the cost cap, so there is a cost to the business. For England and Wales, there is a move to centralise warrant signing, which is very welcome. In Scotland, the warrant system can be inconsistent and a single approach would be welcomed there.
SN: In Scotland, you have much more control at the enforcement stage, because you are instructing a sheriff officer to carry out a specific method of enforcement that you have selected. Whereas in England, I understand that the bailiff has almost carte blanche to do what they feel is correct. The feedback from sheriff officers is very valuable in either prompting engagement or identifying the most effective means of enforcement.
Our primary objective is to engage with the domestic customers, to get them to speak to us, in order to work with them on repayments. It is to split our base into the ‘will pay’ and ‘won’t pay’, and also those who have vulnerabilities
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DM: If the question is whether it is worthwhile litigating in Scotland, then I firmly believe that it is, because, beyond your customer’s own individual debt, there may well be a whole group of other creditors who your client will be under pressure from, and those who shout loudest will get paid. We have been involved in cases where we have consented to act and that debt has been paid off, and maybe a couple of weeks later the individual, partnership, or company has gone bust. So the creditor who has litigated early, has recovered much more than any other creditor. I think that sometimes creditors act in isolation, but, in fact, there is a much bigger, holistic picture of that individual. CCR
April 2018
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