membersadvice Pre-action protocol for debt claims: Are you complying with the requirements?
THE MINISTRY OF Justice has recently published the Pre-Action Protocol for Debt Claims (the ‘Protocol’) on the process for recovering debts from private individuals (including sole traders). The aims of the Protocol are laudable: •to encourage better communication between parties so that both behave reasonably and proportionately (particularly to avoid running up costs that bear little relation to the amount in dispute)
• to try and avoid disputes escalating to court • if a dispute does reach court, to ensure that proceedings are managed efficiently and cost-effectively.
Sending a letter of claim and what to include
The process you need to follow in terms of notifying the debtor of your claim, and how the debtor should respond, might seem rather daunting at first glance. The initial letter of claim is very prescriptive: you must include as much detail about the debt as possible, including the original agreement governing the debt, and details of how it should be paid. Attached to the letter should be a reply form (for the debtor to complete and return), an information sheet, and an up-to- date financial statement.
Settling the debt The debtor should respond to your letter of claim within 30 days of receipt. There are strict time limits around the start of court proceedings, especially if the debtor is seeking debt advice. If that is the case, then you have to give them a reasonable amount of time to obtain appropriate advice (which can be sourced via a number of free independent advice organisations, such as Citizens Advice, National Debtline and Step Change Debt Charity). Any payment agreement should, unsurprisingly, bear in mind the debtor’s financial circumstances and the onus is on you, as the creditor, to extract the necessary information about the debtor’s position. If the parties cannot resolve their dispute, the
protocol encourages them to consider Alternative Dispute Resolution (ADR) (as an alternative to going to court) although they are strongly advised to take into account the relative cost of the debt versus the cost of ADR before embarking on it.
Review your current processes for collecting debts
As the Protocol will make the debt recovery process more cumbersome for many businesses, you may well have to change your approach to collecting debt. Think about where you can
Ann O’Connor
condense the time limits in your current credit control cycle to avoid delays in collecting your debts; train your employees to be fully compliant with the Protocol requirements; and make any necessary changes to your systems to keep your business’s cash flow on track.
What to do now
There is a detailed explanation of exactly what you need to include in your letter of claim and the required attachments; how the debtor must respond and the disclosure of information; and the dispute resolution process both on our website
https://tinyurl.com/DebtProtocol and at
gov.uk But, first and foremost don’t panic! Now is the
time for you to consider what changes you need to make, if any, to your internal debt recovery processes
and
procedures in order to accommodate the Protocol requirements
01926 886 688
www.wrighthassall.co.uk
Dedicated online portal for PDA Members coming soon
PREMIER BUSINESSCARE, THE PDA’s partner insurance broker, have announced that PDA Members will soon have their very own Quote & Buy portal. This means you can compare quotes from a range of UK leading insurers and purchase your insurance online in a matter of minutes. It can often be difficult for you to obtain a quotation for Business Insurance during office
working hours, so they’ve been busy developing an online platform to enable you to buy your insurance at a time that suits YOU! Premier Businesscare are a highly experienced broker dealing with some of the UK’s leading
insurance companies, which means that they can offer all PDA Members fantastic rates on the insurance you need in a simple and hassle-free way. Of course, if your insurance needs are more complex and you would prefer to speak to one of their specialist advisors over the telephone, then
they’re always on hand to give you advice and support. Watch out for updates! You’ll soon receive notification from the PDA about the launch of the Quote & Buy facility,
but should you have any queries in the meantime, please contact Premier BusinessCare directly on the dedicated PDA phone line 0330 102 6155 or email them
pdaenquiry@premierbusinesscare.co.uk
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association news
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