A new Protocol for creditors bringing debt claims will operate from 1 October 2017, issued by the Master of the Rolls under the Rules of Court.
Prior to this date there is no specific Pre-Action Protocol for debt claims, although parties are expected to comply with the existing Practice Direction for Pre-Action Conduct.
WHEN THE PROTOCOL WILL APPLY
The Protocol applies to ‘any business’ including sole traders and public companies.
The Protocol sets out the conduct the court will normally expect of those parties prior to the start of proceedings, including a template Information Sheet and Reply Form to be provided to debtors in all cases.
The Protocol applies to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader). The business will be referred to as the “creditor” and the individual will be referred to as the “debtor”. It does not apply to business-to-business debts – commercial debts – unless the debtor is a sole trader. The Protocol operates in accordance with any specific regulatory provisions (which take precedence in the event of any conflict).
The Protocol is intended to complement any regulatory regime to which the creditor is subject.
The Protocol should also be read in conjunction with industry and government guidance relating to good practice in the recovery of debt and does not apply when there is another protocol in place e.g. mortgage arrears and HM revenue and Taxes.
Under the protocol the creditor will be required to send a Letter of Claim to the debtor before proceedings are started.
The Letter of Claim should –
(a) contain key information
(i) the amount of the debt;
(ii) whether interest or other charges are continuing;
(iii) where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed;
(iv) where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor;
(v) where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom;
(vi) if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered;
(vii) details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options;
(viii) the address to which the completed Reply Form should be sent;
Nucleus will be providing further bulletins and updates on the Protocol and its implications.