Bailiffs: Regulatory Reform

Ranil Jayawardena Excerpts

Wednesday 9th January 2019 Westminster Hall

[Emma Reynolds (Wolverhampton North East) (Lab)]

I beg to move,

That this House has considered bailiff regulatory reform.

As ever, Mr Evans, it is a pleasure to serve under your chairmanship, and I wish all hon. Members a happy new year. As we embark on a year that will be dominated by Brexit—as we saw in the Chamber just a minute ago—it is good to focus on another concern of our constituents. I called for this debate on reforming the regulation of bailiffs because a shocking case of aggressive behaviour by bailiffs in my own constituency was presented to me at an advice surgery, and I have heard countless other examples from hon. Members and from the charities involved. I thank my local paper, which published an article on the topic over the Christmas period, and members of the public who got in touch with me.

My main message to the Minister is that we simply cannot let bailiffs become a law unto themselves. The Government need to take urgent action against bailiffs who break the rules, behave aggressively and act with apparent impunity. According to the evidence presented by Citizens Advice, StepChange and other organisations, this is not just a few bad apples, but a widespread problem. Although I welcome the call for evidence that the Government announced last year, I stress to the Minister that we are not discussing a minority of bailiffs, and I urge her and her Department to recognise that. After all, we have to face up to the scale of the challenge if we are to find the right solutions.

Some 2.2 million people in England and Wales have been contacted by a bailiff in the past two years. The regulations that the Government introduced in 2014 are welcome, but there are huge problems with the lack of enforcement. Since the introduction of those reforms, Citizens Advice has recorded a 24% increase in problems with bailiffs. One person in three who has experience of bailiffs has seen them breaking the rules, and 40% have suffered intimidation. Unfortunately, the fee structure has created a perverse incentive for bailiffs to make visits and reject repayment offers, which we have seen time and again, as they can charge fees of £235 for every debt they collect in person.

I first became aware of the severity of this problem last year, when a disabled constituent came to see me at an advice surgery. Let us imagine for a moment being in her shoes: you and your partner are just getting up. You hear a knock at the door. Your partner goes to answer it. You hear loud voices, then feet on the stairs. A total stranger strides into your bedroom. You are absolutely terrified. The first thing he does is pick up your purse and take out all the cash. You think you are being burgled, but you are not: you are being visited by bailiffs. My constituent’s experience, unfortunately, is not an isolated case. Another man told me that bailiffs used humiliation in front of his neighbours to gain entry to his home. He said:

“They tried to push their way into my house saying they have a right to. When I asked to see the court papers the bailiff said—you have already had them and he would only discuss the case in the house. He then started shouting so that other people”

including his neighbours

“could hear him—this was obviously to embarrass us”

and to intimidate the man.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

I congratulate the hon. Lady on securing this important debate on an issue that is faced by people across the country. Regarding the point she has just raised, does she agree that the current regulations give perfectly innocent people no opportunity whatsoever to prevent a visit by bailiffs or verify the authenticity of visiting bailiffs when they are not the debtor concerned? One of my constituents faced that situation—a traumatic ordeal along the lines that the hon. Lady has outlined.

[Emma Reynolds]

From all the cases that I have heard about, those experiences are traumatic and have a lasting effect on the people involved. In many cases, they are not necessarily the debtor—they are not the person who owes the money—but they are still treated in an appalling manner. That is not to say that the debtor should be treated appallingly either, but bailiffs do not seem to have regard to the rules, which is that they can seize possessions that belong only to the debtor.

That brings me to another example—a person from the constituency of the hon. Member for Harborough (Neil O'Brien), whose son was in debt and who bravely spoke out on the radio today about his experience. He said:

“We invited these men into our home so that we could understand what was going on and in the belief that we could then work with them to resolve the problem. All they did once inside our home was to threaten us with public humiliation. At no time did they advise us of any of our rights. We were told that although we were in our own home that the only way we could prevent them seizing our property”,

including this gentleman’s car,

“was if we could produce receipts.”

I do not know about other Members, but I would not have a receipt for my car at hand if someone were to knock on my door. I know that the hon. Member for Harborough will speak in more detail about his constituent, whom I thank for coming forward.

In another case, a woman told me:

“I went to close the door and the bailiff put his foot in to my hall to prevent me from shutting the door. I got through to the police, explained the situation, was told he had no right to demand to come into my house. The bailiff had gone by then and did not return but I felt very intimidated and for a while found myself checking through the window before opening the front door.”

How awful that a person should not feel safe in their own home.

--- Later in debate ---

[Neil O'Brien (Harborough) (Con)]

I congratulate the hon. Member for Wolverhampton North East (Emma Reynolds) on securing this important debate; she spoke incredibly well. She referred to the treatment that my constituents received at the hands of bailiffs. Let me add a little about their experience by quoting from a letter they wrote:

“My wife & I (both retired) were woken up by loud banging on our front door at 7.22am. When I answered the door I was confronted by two men who announced that they were bailiffs… The first we knew of the matter was when they…turned up at our door… We were…in shock…at the threat of a tow truck arriving at our door to remove our car and that we were to be humiliated by our possessions being publicly removed from our house… Later that day my wife and I sought advice from our local Citizens’ Advice Bureau... The CAB advisor informed us that we could have refused the officers entry…and that we could have signed a Statutory Declaration of ownership covering goods not belonging to our son which should have prevented our property being taken in lieu for my son’s debt. At no time did the officers inform us about this… My wife and I have never broken the law. Both my wife and I used to work for the prison service. We have both since we retired, been active as local volunteers… I…find it reprehensible that two pensioners should be coerced, albeit politely, into having to hand over their pension savings for something that they are not in any way culpable for. Nor can we believe that British law supports the kind of action we have experienced.”

They are absolutely right. It is clear that the law needs to change and that we need to go beyond the 2014 reforms, and I am glad that the Government have announced the call for evidence. I praise the campaigning work of Citizens Advice and the debt charity StepChange. I think six main things need to change.

First, we need an independent regulator, and I welcome that being raised explicitly in the current review. When I took up my constituents’ case, I was astonished to find that there was no independent regulator, given that there are industries such as the parking industry in which far less serious things happen but in which there is a clear independent regulator. Debt collectors who are not bailiffs and do not have bailiffs’ powers have a regulator, so this is a historical anomaly that needs to be fixed.

Secondly, once the regulator is set up, it needs to improve the process. Part of that is about communication —if my constituents had been informed about the debts at an earlier stage, they could have nipped the whole problem in the bud—but part of it should also be about the offer of an affordable payment plan, as several hon. Members have said. Affordable payment plans have become the norm in most types of debt collection and for most utilities, because we know that vulnerable people are much more likely to pay if they are offered a structured plan rather than getting a big demand all at once. As it happens, my constituents are bright, articulate, hard-working people, but even they felt totally humiliated by the process. Imagine how those who are more vulnerable feel.

[Mr Jayawardena]

Does my hon. Friend agree that it is only right that homeowners should be notified of the fact that a bailiff is about to attend? Of course, we should recognise data protection concerns as well.

[Neil O'Brien]

Absolutely. That point brings me on to the third thing that needs to change: people need to be told what their rights are. My constituents never were. If someone is arrested, they are told their rights; the same thing should happen if a bailiff visits.

Fourthly, there must be a clear and simple complaints procedure through the new independent regulator, backed up with swift fines for bailiffs who break the rules. Fifthly, there must be controls on fees. My constituents’ son’s original debt was increased by half again, and we have heard about the tragic case of Jerome Rogers, which is incredibly moving. I was shocked that a publicly funded institution had initiated the debt collection against my constituents. As hon. Members have said, the incentives in the industry are to seize as much as possible in order to do as much business as possible, and there is no link between fees and ability to pay. Finally, the new regulator should improve training standards for bailiffs, as some have only a few hours of training. That is truly shocking.

A great injustice was done to my constituents, who are hard-working, law-abiding, public-spirited people. We are lucky to have a very able Minister guiding the Government’s response to the call for evidence. Every single day in this country, vulnerable people are being maltreated purely as a result of a historical anomaly. I know that she will want to put that right as soon as possible.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the hon. Member for Wolverhampton North East (Emma Reynolds) on securing the debate on a matter that I know has affected her constituents greatly, as she spoke to me about it a few weeks ago.

I pay tribute to all hon. Members for the quality and passion of the contributions today. As my hon. Friend the Member for Henley (John Howell) said, this is a timely debate because on 25 November the Government launched a call for evidence to inform their second review of the 2014 reforms that regulate enforcement agents, in order to ensure that that important area operates well. We have framed that call for evidence against the points that have been raised with us about how the system is not operating as it should. We have heard much today that will help us reflect on that call for evidence.

It is interesting that three colleagues—my hon. Friends the Members for North East Hampshire (Mr Jayawardena), for Harborough (Neil O'Brien) and for Hendon (Dr Offord)—all raised examples of bailiffs taking action against people who were not even the debtors.

[Mr Jayawardena]

I welcome the fact that the Government have agreed to review the matter. Does the Minister agree that it is important to stop innocent homeowners being caught up in the collection of debts that they have nothing to do with, including where those debts have been incurred through fraudulent credit card applications, as in the case of my constituent?

[Lucy Frazer]

That is a very interesting point, which I just highlighted—three of my hon. Friends raised the issue of whom the action is taken against. I know my hon. Friend feels strongly about this, and it is something he has talked to me about before.

Before I turn to the review in more detail, I want to set out a bit more about the subject of debt enforcement more broadly. Enforcement agent action has been, and is likely to remain, a highly divisive subject. People who experience debt problems represent a broad spectrum of society, including some who are extremely vulnerable and others who deliberately refuse to pay for products and services.

It is important to note the two points that were made in this debate by a number of Members. The hon. Member for North Antrim (Ian Paisley) and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) highlighted the need for people who owe money to pay their debts, because the recovery of debts is important to the economy and the justice system. My hon. Friend the Member for Redditch (Rachel Maclean) highlighted the good practice of a company in her constituency. The Government are committed to ensuring that all enforcement agents treat debtors fairly and operate responsibly and proportionately. Our role as a Government is to strike the right balance between ensuring that debts can be collected effectively while protecting debtors from enforcement agents’ aggressive behaviour.

With those principles in mind, and after an extensive period of research and engagement, the Government imposed significant extra regulation on the enforcement process and the behaviour of enforcement agents in April 2014. I am pleased that the hon. Member for Wolverhampton North East welcomes those reforms, which included a comprehensive code governing when and how enforcement agents can enter somebody’s premises; the safeguards to prevent the use of force against debtors; which goods agents can and cannot seize and, if necessary, sell; and what fees they can charge.

The reforms stopped enforcement agents entering homes when only children are present and introduced important safeguards for vulnerable debtors. They aimed to make all parties more aware of their rights and responsibilities and introduced a new certification process for enforcement agents to ensure that they are the right people for the job. They introduced mandatory training to ensure that enforcement agents have the skills required to perform the role. The Government undertook to review the implementation of the reforms after one, three and, if necessary, five years in order to check that they are working as intended. The review, which was published in 2018, found that the reforms had many positive benefits, such as better awareness of debtors’ rights and how to complain, as well as more clarity for debtors about the fees that can be charged, the processes that should be followed and where to go for advice. However, it also reported that debt advisers and debtors still perceive some enforcement agents to be acting aggressively and, in some cases, not acting within the regulations.

The Government take those concerns very seriously. While many enforcement agents work within the law, we will not tolerate any who pursue aggressive tactics and bad practice, who make people’s lives a misery and ruin the industry’s reputation. For that reason, we launched the call for evidence to shine a spotlight on the behaviour of enforcement agents. Many of the points that have been raised today are the subject of that call for evidence. The hon. Members for St Helens South and Whiston (Ms Rimmer) and for Wolverhampton North East highlighted the problem of threatening behaviour, which is part of the call for evidence. My hon. Friend the Member for Henley and the hon. Member for Wolverhampton North East raised the issue of complaints, which is also a subject for the call for evidence. The hon. Member for Coventry South (Mr Cunningham) and my hon. Friend the Member for Harborough raised issues about training—again, that is a matter for the call for evidence.

The independent regulator, which is part of our consultation, was raised by my hon. Friends the Members for Henley and for Harborough, and by the hon. Members for Coventry South, for Wolverhampton North East, for Leeds West (Rachel Reeves), for Croydon Central (Sarah Jones), for Ellesmere Port and Neston (Justin Madders) and for Makerfield (Yvonne Fovargue). The treatment of vulnerable people was raised by the hon. Member for Lewisham West and Penge (Ellie Reeves), and that is also covered in the call for evidence, which is running for 12 weeks until 17 February 2019. As part of that, we are meeting representatives from the advice sector to get a better understanding of the research they have conducted and their concerns, and we will also be talking to enforcement agents and creditors. However, the call for evidence is not just about collecting data; we are very keen to hear from people about their individual experiences. A number of hon. Members have shared the experiences of their constituents, whom I encourage to respond to our call for evidence.

I was very pleased to have had the opportunity to meet the hon. Member for Croydon Central and her constituents the Rogers family, who sadly lost Jerome following visits to their home by enforcement agents. Like others, I am pleased to see them here today. I thank them for their contribution to this important issue and for their continuing efforts to highlight this matter.

A number of hon. Members have suggested that the Government’s reforms should go further by introducing an independent regulator, and that there should be a simpler, free and independent complaints procedure. As set out in the call for evidence, we are considering these suggestions. The call for evidence asks whether independent regulation is needed and, if so, what form that should take and how it should be funded. We would welcome any input on all those questions. It also asks about the complaints procedure, as I have said.

In addition to reviewing the behaviour of enforcement agents, the Government are working more widely to help people who fall into problem debt by providing them with protection and ensuring that creditors are acting responsibly. For example, the Government are increasing funding for free debt advice via the Money Advice Service, which will spend £56 million this year to help more than half a million people. After consultation, and via regulations to be laid this year, the Government will implement their 2017 manifesto commitment to introduce a breathing space in order to give people in serious debt the right to legal protections from their creditors for up to six weeks. We will also introduce a statutory debt repayment plan to enable those with unmanageable debts to enter into an agreement to pay their debts in a realistic timeframe. The Ministry of Justice is a member of the Government’s Fairness Group, which works with the advice sector to look at the issue of fairness in Government debt management and in enforcement practices.

I would like to end by commenting on the cross-party support to address this important issue. It has been invaluable to me, and I am sure to others, to hear not only people’s tragic personal stories, but articulate and thoughtful arguments about the principle behind these issues.