What the new enforcement legislation means to utilities by Claire Sandbrook, chief executive of Shergroup

The impact of the "credit crunch" on utilities means has there has never been a greater need for utility companies to invest in updating their customer data.

The economic climate, coupled with the enacted Tribunals Courts and Enforcement Act 2007, means utility companies need to work smarter in when and how they litigate and, as a result, how they enforce their judgment debts.

Too often litigation is used as a tool without a strategy on how the resulting judgment will be enforced and in the world of utilities that comes at a significant cost.

With the new Act on the agenda of the Ministry of Justice, utility companies would do well to think seriously about their entire strategy when it comes to ensuring they recoup their investment on litigation by having strategies that contemplate the impact of the new Act.

In many ways the TCEA was designed to make the court system more effective for creditors of any shape and size and indeed the reforms do clear up some anomalies in the current enforcement system. However, the Act also introduces a raft of new measures to protect the "Can't Pays" and clearly this is going to be an issue for utility companies in how they manage this aspect of the new legislation.

An understanding of how the Act is structured is probably a good starting point to appreciate what may be likely in terms of changes that are afoot.

In essence the Act is divided into 8 parts, three of which are directly relevant to how utility companies enforce their judgments.

Part 3 of the Act entitled "Enforcement By Taking Control of Goods" codifies the existing law surrounding the appointment and process of differing types of enforcement officers (or bailiffs) operating in England and Wales.

In the utilities sector, extensive use is made of both county court bailiffs and private bailiffs. In time the ways that both types of bailiff operate will become part of a regulated industry.

Terminology within the Act changes well-worn phrases into plain English. The most popular method of court-based enforcement, the Warrant of Execution, is revamped into a "Warrant of Control". Lesser-known Writs of Fieri Facias (being the High Court version of the same instrument), become Writs of Control.

Utility companies are, at last, taking advantage of the High Court process to transfer County Court Judgments to the High Court for enforcement for amounts over £600, with the benefit of High Court Enforcement Officers (HCEOs) going early in the morning to seize the family vehicle, or the prize Plasma.

The process of execution against goods becomes "taking control of goods", which will probably make more sense to the public in terms of what enforcement means to them when they get the knock on the door.

The process of how warrants and writs of control are to be enforced is simplified. It is hoped this will help both creditors and debtors to appreciate where they are in the enforcement process.

Forcing entry to take control of goods inside the home is now on the statute books and we will have to wait and see if policy makers and their political masters have the appetite to make the accompanying Regulations, which will make this part of the Act a reality that in turn would give enforcement officers more powers to handle the "Won't Pays" who resolutely refuse to obey a court order.

Moving away from taking control of goods, Part 4 of the Act makes certain changes to Charging Orders - made by the court, which give the Trustee (of the order) a legal charge upon the debtor's interest in his/her home - Attachment of Earnings and Information Requests.

Attachment of Earnings (important where employment of the debtor can be proved) sees a simpler system of deductions from salary using fixed rates being brought in. It should also become easier for creditors to track employees who change jobs, as a result of the linking of procedures between Her Majesty's Court Service (HMCS) and HMRC in terms of providing information.

Charging Orders, which are being successfully used by some water companies as an alternative to Warrants of Execution, see changes that will allow creditors to apply for a Charging Order even if the debtor is not in default of any payments under an Instalment Order.

However, under Section 93 of the new Act, restrictions on Charging Orders are being proposed that include introducing a minimum limit on the amount of judgment debt that can be subject to a Charging Order, and a minimum amount that must be outstanding before an Order for Sale can be granted.

It is hoped that the minimum amounts will still enable utility companies to make use of this procedure as part of their strategy for enforcing judgments against home owners.

Access to accurate information about a debtor's assets was seen by Government as vital in a successful enforcement process and this has found its way into Part 4 by the creation of two new mechanisms, the "Information Order", and the "Departmental Information Request".

Both are designed to supplement the existing Order To Obtain Information procedure under Part 71 of the Civil Procedure Rules. In essence, creditors will be able to make an application to the court for information about "what kind of action it would be appropriate to take in court to recover that particular debt" (Section 95(1)). The court will them embark on a process to decide how to obtain the information required.

Both types of information instrument do move enforcement forward from where it is today, although we wait to see what the cost of these requests will be, and whether there is the supporting infrastructure in the court system to process requests efficiently.

Part 5 of the Act offers what will be the most significant changes to the enforcement regime and should be taken on board now as a sea change on how enforcement will work in the future.

Effectively a number of stays on the enforcement process will be introduced under the Act and creditors need to be aware of how each one will affect strategies for the enforcement of judgments in any given area.

The types of debt management and relief provision, which are designed to meet the needs of the "can't pay" group of debtors include:

1. Utility companies should devise a clear set of strategies for accounts in litigation and enforcement
2. Enforcement action should match the type of assets that may be available
3. Companies should look at ways to capture information about a customer's assets
4. Customer account application forms should be constantly reviewed to ensure pertinent information about potential assets is being recorded
5. Question how information in relation to home ownership/current employment/bank account information is being captured and retrieved
6. Can procedures to ask customers about home ownership/employment be set up in Customer Contact Centres?
7. Existing filing cabinets of judgments should be sorted and where home ownership is likely, then early applications for Charging Orders should be made
8. Utility companies should consider transferring debts over £600 to High Court Enforcement Officers for enforcement
9. More protection for debtors means utility companies need to have better systems for flagging and checking accounts that go into default so that the various
schemes can be managed 10.Where possible utility companies should lobby Government to ensure supporting Regulations for the TCEA meet the needs of the various utility sub-sectors

Shergroup is one of the leading providers of outsourced business services, specialising in enforcement, security, legal services and IT solutions. For more information, call 0845 890 9200 or log on to www.shergroup.net

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