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ENFORCEMENT OF CIVIL OBLIGATIONS IN SCOTLAND: ANALYSIS OF CONSULTATION RESPONSES
PART 2B SUMMARY: ANALYSIS OF RESPONSES
The following sets out a summary of the analysis of the responses to each of the questions in the consultation document.
The full textual analysis is given under the relevant section further on in the report.
PART 3: STRUCTURE AND ORGANISATION OF THE ENFORCEMENT SYSTEMS
Q3.1 Should there be a Scottish Civil Enforcement Commission to carry out the enforcement functions specified?
There is overwhelming support for the establishment of a Civil Enforcement Commission to carry out the functions detailed in the consultation document.
Q3.2 Should the Commission have responsibility for determining an education and information programme and what form should this take?
There was almost unanimous agreement that the Commission should have responsibility for an education and information programme and a variety of suggestions as to how this might be done.
Q3.3 Should the Commission carry out other functions?
A range of other functions are suggested, including the Commission setting standards on training and competence for those involved in both enforcement and advisory roles, instigating a complaints scheme, and monitoring the behaviour of enforcement officers.
Q3.4 Should the Commission comprise the membership specified?
The suggested mix of judicial, lay and professional membership is welcomed.
Q.3.5 Should there be a single class of enforcement officers?
Q3.6 Should informal debt collection activities be regulated in Scotland including mandatory codes for appropriate standards of care and conduct?
There is majority support for a single class of enforcement officer and for informal debt collection activities to be regulated, including mandatory codes for appropriate standards of care and conduct.
Q3.7 Would access to information held by third parties assist towards achieving more effective enforcement?
Q3.8 If so, what type of information held by which third parties should be permitted?
Q3.9 Should the same types and sources of information be uniformly accessible in the different UK jurisdictions?
Whilst in principle there is support for access to information held by third parties, such as employment details, national insurance number and so on, being available to creditors, there are concerns about issues of privacy, data protection, and human rights. Most respondents are of the view that whatever procedures are adopted for disclosure of information should be uniformly accessible across the UK.
PART 4 DEBTOR PROTECTIONS
A. TIME TO PAY ARRANGEMENTS
Q4A.1 Should Creditors be offered the option, on lodging their summons, of paying an additional nominal fee to receive by post, details of any TTPD offer for payment made by the debtor and the debtor's financial circumstances?
There is near universal agreement that creditors should automatically receive details of any Time To Pay Direction (TTPD) but that this should be at no cost to the creditor. Several respondents wish to see debtors being informed if their offer has been accepted or rejected.
Q.4A.2 Should application forms for TTPDs be revised to enable debtors to provide more detailed information about their financial circumstances?
Respondents agree that a revised TTPD form will be beneficial for creditor and debtor.
Q4A.3(a) and 4A.3(b) Should the rules relating to TTPDs be revised to require acceptance to be notified several days prior to the hearing? If so, what period would be appropriate?
Respondents agree that acceptance or rejection of the TTPD should be notified several days before the hearing, with different views on the number of days notice to be given varying from two up to fourteen.
Q.4A.4(a) Should statutory guidance be introduced to specify the factors which ought to be taken into consideration by the Sheriff in disposing of TTPD and Time to Pay Order (TTPO) applications?
Q.4A.4(b) If so, should any other factors than those mentioned be taken into account?
Most respondents are in favour of introducing statutory guidance to specify the factors to be taken into consideration by the Sheriff in disposing of TTPD and TTPO applications. Factors might include the debtor's ability to pay, multiple debt situations, personal circumstances e.g. divorce/bereavement, and so on.
Q4A.5 Should a charge for payment served on a debtor who is eligible to apply for a TTPO, and other documents served or intimated to the debtor during the course of diligence, be accompanied by a note explaining TTPOs and an application form for an order?
There is substantial support for clear, straightforward information being available for debtors applying for a TTPO.
Q4A.6 Should the absolute rule against the granting of a TTPO to a debtor who has already enjoyed the protection of a TTPD be retained?
A small majority of respondents wish to retain the rule against granting a TTPO to a debtor who has already had a TTPD, whilst the minority argue for a "second chance" for debtors who through factors outwith their control were unable to comply with a TTPD.
Q4A.7 Should further information and publicity about TTPDs and TTPOs be included within the Scottish Civil Enforcement Commission's general information and education strategy?
Q4A.8 Should the rules regarding representation in applications for time to pay arrangements be the same under the 1987 and 1974 Acts?
Q4A.9 Should similar protections in the 1987 Act, for service by the sheriff clerk of applications for time to pay and lay representation at hearings, be extended to the 1974 Act?
There is general support for the provision of further information and publicity about Time To Pay Directions (TTPD) and Time To Pay Orders (TTPO). Respondents are agreed that the rules regarding representation should be consistent and uniform and that similar protections in The Debtors (Scotland) Act 1987 be extended to The Consumer Credit Act 1974.
B MEASURES TO ASSIST UNREPRESENTED PARTIES
Q4B.1 Should the no expenses rule be extended to applications for time to pay orders or other proceedings under the Act in line with current application for time to pay directions?
The majority of respondents favoured a consistent approach in terms of no expenses - i.e. that it should apply to both TTPDs and TTPOs.
Q4B.2 Should measures to assist unrepresented parties and encouragement for party or lay representation form part of an information and education programme?
Respondents support an information and education programme which offers assistance to unrepresented parties and encouragement for party or lay representation.
Q4B.3 Should Sheriff Clerks be obliged to assist creditors to use the provisions of the 1987 Act in the same way as for debtors?
Q4B.4 Should further training be made available for Sheriff Clerks to emphasise the importance of their role in assisting parties?
There was general consensus that creditors, in particular sole traders or small businesses should have access to assistance from Sheriff Clerks, and that further training should be made available to Sheriff Clerks.
Q4B.5 Should there be a review of the documentation currently in use?
A review of the documentation currently in use is supported, to improve its "user-friendliness".
C. WRONGFUL DILIGENCE
Q4C.1 Why is the remedy of wrongful diligence little used?
Respondents' views on why the remedy of wrongful diligence is little used vary by type of respondent and include a) in practice there is very little wrongful diligence; b) most individual debtors are ignorant of the remedy; c) establishing wrongful diligence is difficult under the law and d) problems of wrongful diligence are usually settled out of court.
Q4C.2 Should an enforcement officer or instructing solicitor involved in diligence, which they knew or ought to have known was unlawful be:
(a) jointly and severally liable with the creditor in damages for wrongful diligence?
(b) or wholly liable in place of the creditor?
In terms of liability for wrongful diligence, the consensus view is that the individual or individuals, whoever they may be, who are responsible for the wrongful diligence should be those held liable for it.
Q4C.3 Should the test to be met by a pursuer in an action for wrongful diligence, or malice and want of probable cause, be expanded to include negligence in the execution of the diligence?
Q4C.4 Should the law be clarified to make it clear how a summary warrant wrongfully obtained should be challenged?
There was a straightforward majority in support of including negligence in the execution of the diligence in the test to be met by a pursuer in an action for wrongful diligence. There is universal agreement that the law be clarified to make it clear how a summary warrant wrongfully obtained should be challenged.
D DEBT ARRANGEMENT SCHEME
Q4D.1 Should a statutory debt arrangement scheme be introduced in Scotland?
Most respondents welcomed the establishment of a debt arrangement scheme and many had both general and specific comments about how this might operate. The minority who oppose the scheme regard the status quo as adequate, or wish to see more infrastructure development before the introduction of a scheme. Some are concerned that the scheme may be mandatory for all creditors, or that debtors may not be able to keep to the terms of the scheme.
Q4D.2 In general, do the Executive's proposals offer a good approach for a modern accessible DAS?
A substantial minority of respondents appeared not to be convinced that the Executive's proposals offer a good approach for an accessible DAS. However on close examination, most "no" responses are in favour of the DAS but offer suggestions for improvement. There is a general view that acceptability of the DAS by the various interested parties will depend on the final details.
Q4D.3 Should title to apply to participate in a DAS be restricted to debtors and not to creditors?
Most respondents are in favour of restricting title to apply to participate in a DAS to debtors on the basis that a debtor would have to "buy in" to the Scheme for it to work. There was a view from some in favour of allowing creditors to initiate proceedings, on the grounds that this may be in the debtor's interest rather than allowing debt to accrue.
Q4D.4 and Q4D.5 Should access to the DAS be open to all personal debtors including small traders but not business debtors? How should small traders be defined for this purpose?
Although there is a small majority in favour of opening the DAS to small traders, there is no clear view on the definition of small trader. Arguments revolve around a definition based on personal liability for the debt or more complex definitions relating to turnover, legal status etc.
Q4D.6 What period should apply to approved schemes and should there be any provision for extension of that period?
Some respondents wish to see a fixed time period for a DAS, with some suggesting three years extending to five, and others suggesting five years with the possibility for extension. Other respondents suggest a fluid timescale depending on individual debtor circumstances.
Q4D.7 Should there be a restriction on obtaining new credit or incurring new liabilities above a specific amount and, if so, should a maximum amount be set?
There is clear support for a restriction on obtaining new credit or incurring new liabilities above a specific amount, but few suggestions of an exact sum. Most respondents argue for a degree of flexibility during the life of the DAS to allow a debtor to deal responsibly with any unforeseen need for borrowing.
Q4D.8 Should existing arrangements operating for voluntary repayment programmes be incorporated insofar as possible?
Whilst there was general support for incorporating existing arrangements for voluntary repayment programmes insofar as possible, a number of respondents also wished to allow for the retention of voluntary repayment programmes in instances where it might not be appropriate or possible for their incorporation.
Q4D.9 Should applicants have access to free money advice services for negotiation and preparation of a DAS application?
The great majority of respondents are in favour of applicants for a DAS having access to free money advice services.
Q4D.10 Should money advisers and payment distribution providers be accredited in order to maintain high levels of service provision?
Respondents are generally in favour of accreditation of money advisers and payment distributors but views vary as to how this might be achieved.
Q4D.11 Should the Scottish Civil Enforcement Commission be responsible for administrative approval of DAS applications?
Q.4D.12 (a) Should DAS applications be approved administratively where agreed and in accordance with specified standards?
(b) Should DAS applications be approved administratively where agreed in principle subject to resolution of proposed payment terms?
Q4D.13 Should disputed cases be considered by the Sheriff Court?
There is a qualified yes from the majority of respondents to the Commission being responsible for administrative approval of DAS applications, with most respondents of the view that disputed cases should be considered by the Sheriff Court. A minority of respondents would prefer a DAS tribunal to resolve disputes.
Q4D.14 Should a register of subsisting approved plans under the DAS be maintained?
There is almost complete support for a register but some apprehension about how public this might be, and concern that it would need to be kept up to date to be effective.
Q4D.15(a) Should all debts rank rateably?
There is support for all debts ranking rateably, with the principal exception of debt owed to involuntary creditors.
Q4D.15b Should the types of debts specified be included?
Most respondents wish to see all debts specified included in a DAS with advice agencies wishing to see interest frozen to enable the debtor to eventually clear his/her debt.
Q4D.16 Should an application to enter the scheme be accompanied by a mandate authorising the employer to make deductions from earnings?
There was substantial in principle support for a mandate authorising the employer to make deductions from earnings, with some caveats concerning the debtor's rights as an employee to privacy and confidentiality and some respondents suggesting that the mandate should be an option for the debtor which the debtor would have to agree to the employer using.
Q4D.17 Should enforcement be stopped once a DAS application has been granted?
There is overwhelming support for stopping enforcement once a DAS application has been granted, with a small number of organisations preferring diligence to be stopped at the point of application rather than at the point of granting of the application [see also Q4D.29.]
Q4D.18 Should prescription be suspended during the currency of a DAS?
Q4D.19 Should the other rights and remedies specified be preserved?
There is also support for suspending prescription during the currency of the DAS, and for preserving other rights and remedies for the creditors in the event of the failure of the DAS.
Q4D.20 Should the rules specified for governing competence and priority in relation to sequestration apply?
The proposal relating to the application of the rules specified for governing competence and priority in relation to sequestration was generally accepted.
Q4D.21 What level of creditor support should normally give rise to approval of a DAS application?
Q4D.22 What upper monetary limit of total debt should be set?
Q4D.23 What lower monetary limit, if any, should be set?
There is no clear consensus as to level of creditor support needed for approval of a DAS, nor is there a consensus as to the upper or lower monetary level to be set.
Q4D.24 (a) Should access to the scheme be extended to debtors with very little disposable income?
(b) If so, how could this work?
The fact that participating in a DAS stops diligence is seen as valuable for the poorest debtors and this is a significant argument used by those in favour of including those debtors in the Scheme. A number of suggestions were made for ways of enabling those on very low incomes to participate. Those in opposition question whether such individuals could ever realistically pay off the debt, and argue that the cost of administering the scheme might outweigh the income received.
Q4D.24c What role could credit unions play?
Most respondents do not see a significant role for credit unions in this area.
Q4D.25 What outgoings should be regarded as essentials for the purpose of determining surplus income?
The guidelines and budget heads developed by the British Bankers Association and the Money Advice Trust (BBA/MAT) are suggested as useful for the purpose of determining surplus income.
Q4D.26 Should the proposed arrangements for future, contingent, subsequent, and omitted debts apply?
There is general agreement with the proposed arrangements, for future, contingent, subsequent and omitted debts, those in support arguing that debtors with multiple debt can be genuinely unaware of the range of their creditors at the time of agreeing a DAS.
Q4D.27 Should there be provision for requiring the debtor to realise specific assets and pay the proceeds into the scheme?
There is support for requiring the debtor to realise assets, with the Sheriff using discretion over the specific assets involved.
Q4D.28 Should a variation of the scheme be permitted if a debtor's circumstances change?
There is almost universal agreement to a variation of the scheme by either debtor or creditor if the debtor's circumstances change.
Q4D.29 Should diligence be stopped by a single step procedure?
Some respondents favour a single step procedure for stopping diligence as being simple and clear, whilst others favour stopping diligence on an interim basis as soon as an application is made, with a freezing of diligence once the DAS is confirmed [see also Q4D.17.]
Q4D.30 Should discharge of a DAS be permitted on less than full payment?
There seem to be two interpretations of what is meant by "less than full payment", but overall agreement that whatever sum is negotiated when the DAS is set up, or varied in the course of its life, should be paid before the DAS can be discharged.
Q4D.31 Should penalty for a breach of the terms of the DAS, including false declaration or default in payment, be revocation?
Q4D.32 What extent of default should constitute breach of the DAS?
Most respondents agree that where there is shown to be knowingly false declaration, the DAS can be revoked. There is consensus that two missed payments and a third payment due without satisfactory explanation should be the extent of default allowed for the DAS.
Q4D.33 What reports or notices should be produced by payment distribution operators for applicants or their advisers?
There are a variety of detailed suggestions in relation to what might be contained in a statement from a payment distributor and to whom these statements should be distributed.
Q4D.34 What information should be recorded in a public DAS register?
The broad view from respondents is that as much detail as possible should be contained in a public register but there is a recognition that a public register with full details of individual debtors might conflict with the debtors' right to privacy.
Q4D.35 Should applications be advertised and in what form?
The weight of responses suggest applications should be advertised in the Edinburgh Gazette and possibly the Stubbs Gazette.
Q4D.36 How should the DAS be funded?
There are a variety of suggestions for funding the DAS but the majority of respondents regard the Executive as having a major funding role.
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