Auctioneers buy in stock to sell on at auction, so why can’t HCEOs (or any Certificated Enforcement Agent) buy debt?
In short – because it’s against regulation.
Regulation 4(2)(f) of the High Court Enforcement Officers Regulations 2004 says:
“The individual must not -
(f) carry on or be involved in any business relating to or including the purchase or sale of debts”.
And Question 6 of Form EAC1, required for applying for an Enforcement Agent’s Certificate says
“A certificate cannot be issued to any person who carries on the business of buying debts.”
The longer answer, however, is still a simple one. The fact of the matter is that no individual entrusted with the power to take control of goods by removal and sale should have a personal interest in the outcome.
HCEOs have a duty to be impartial between creditor and debtor - they are not the mere agents of the creditor. On occasions, such as where a debtor is clearly vulnerable, an HCEO must be free to refuse enforcement against goods and suggest an alternative method of enforcing a judgment, of which, in practical terms, there are four.
For example, a creditor chasing a debtor in the final stages of cancer should be told to seek a Charging Order against the debtor’s house, rather than insisting that the car the debtor needs to get to hospital is removed and sold. (A real case where I did indeed, refuse to enforce against goods).
The question that we need to ask ourselves therefore, is would the HCEO be even-handed if he had a personal interest in the outcome? Clearly, the law believes not.
But is there ever an exception to the rule? The issue gets more complex when we look at the commercial reality of how an HCEO or bailiffs, past and present, acquire new business.
The usual approach, when a customer seems fairly happy with the service provided by his existing HCEO, is to offer to rework cases which have been returned as No Goods at no cost to the customer. This involves paying the new Writ fee of £66.00 (a court fee and not a TCG (Fees) Regulations scale fee) which is only recovered if money is paid by the debtor as part of the £117.75 Execution Costs (£51.75 fixed costs + £66.00).
This means that, with unsuccessful cases, there is a loss of £156.00 per case (£66.00 + the waived Compliance Fee of £90.00).
Again, we must ask ourselves - could this be seen as buying debt?
Perhaps not, or not yet, at least. But what happens when this is taken further?
Some will offer to underwrite their potential customer by not only paying Writ fees and waiving Compliance Fees, but by also guaranteeing a percentage of the face value of the old debt - whether recovered or not.
Now could this be seen as buying debt?
It is certainly getting close. The HCEO now has an interest in recovery, both to avoid making a loss, and to secure a new customer.
So, what can be done to avoid this becoming the norm?
We have a continuing discussion in the Association about professionalism and competition. Our current conclusion is, quite simply, that we compete on service and not price. Our articles reflect that: we have a Fee Scale and we stick to it; we work not just within the letter of the TCG Regulations, but within the spirit of those Regulations.
If professionalism means anything in the world of civil enforcement (the Court of Appeal[1] has recently decided that HCEOs and Enforcement Agents are definitely Officers of the Court and must behave accordingly), it must mean that we do not try to bend the rules on fees and buying debt.
That is what we, as HCEOs, have agreed, through our Association.
Andrew Wilson - Chair
The original article appeared in the CICM Magazine.
[1] Court Enforcement Services Ltd v. Marston Legal Services Ltd: 2020 EWCA 588 at paragraphs 118 to 129.
