What Is It?
The Protocol applies to all businesses (including universities) claiming payment of a debt from an individual debtor (including a sole trader). It does not apply to business-to-business debts (unless the debtor is a sole trader) and will not apply if the debt is covered by another Pre-Action Protocol (such as Construction and Engineering).
The Protocol is designed to complement the existing regulatory regime to which universities are subject, and where it is consistent with a specific regulatory obligation then that regulatory obligation will take precedence. It should also be read in conjunction with sector and government guidance relating to good practice in the recovery of debt.
What Is Changing?
The Protocol requires creditors (including universities) to take more steps when pursuing individuals for debts, including:
- Sending an enhanced Letter of Claim to a debtor containing full details of the debt due and a statement of account, together with an information sheet, a reply form and a financial statement form to be completed by the debtor. The letter must be sent by post (unless the debtor indicates otherwise) and be posted on the day it is dated. Sending a Letter of Claim by e-mail only will generally no longer be sufficient.
- Allowing 30 days (rather than 14 days) for the debtor to respond. If a response is not received within this timeframe (taking into account that the debtor may post a response towards the end of the 30 day period), court proceedings can then be commenced against the debtor in the usual way.
- Extending this period by a 'reasonable' time if the debtor is seeking advice, requests further documentation or requires more time to pay.
- Providing the debtor with a copy of any relevant document they request to see within 30 days.
- Proactively contacting the debtor to request further information that will assist in understanding the position if the debtor fails to fully complete the reply form.
- Taking appropriate steps to resolve the dispute without commencing court proceedings, including considering methods of alternative dispute resolution.
- If an agreement still cannot be reached, giving at least 14 days' notice of intention to commence court proceedings.
What If You Fail to Comply with the Protocol?
Failure to comply with the Protocol may result in the Court:
- Staying any legal proceedings to give the parties the opportunity to comply with the Protocol.
- Imposing costs sanctions.
- Not permitting the recovery of costs from the debtor.
- Not permitting the recovery of interest from the debtor, or only permitting the recovery of interest at a reduced rate.
What Should You Do Now?
Universities can start preparing for the Protocol by:
- Ensuring you hold up to date contact information for all individual and sole trader debtors.
- Maintaining good record of all documentations and statements in relation to the debt, so you can act quickly when debts arise.
- Adjusting credit control and debt recovery procedures accordingly.
How Can We Help?
We have implemented the Protocol into our workflows so that we can advise our clients on the information they need to provide within the 'enhanced' letter of claim and throughout the entire matter to ensure compliance.
Our Debt Recovery team acts on behalf of clients recovering debts on a national and international basis, incorporating pre-legal collections, trace and legal solutions which provides the flexibility that clients expect.
For more information, please complete the form below.