The Pre-Action Protocol for Debt Claims produced by the Right Honourable Sir Terence Etherton Master of the Rolls as Head of Civil Justice, came into force on 1 October 2017.

The protocol aims to “encourage early engagement and communication” between the creditor and the debtor. Its implementation is intended to enable parties to resolve their disputes without the need to issue formal proceedings in the courts. Whether in practice this will have any effect on the number of claims for debts being issued will remain to be seen.

Who does the protocol apply to?

  • The protocol applies to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including sole traders).
  • The protocol does not apply to business to business debts unless the debtor is a sole trader.

How to comply with the protocol

The full version of the protocol can be viewed at here. However, the main provisions include (but are not limited to):-

  • The creditor must send a Letter of Claim (by post) to the debtor containing the information set out in Para 3.1(a) of the Protocol and the creditor must comply with one of the provisions of Para 3.1(b). This letter can in addition be sent by email.
  • Debtors have now been provided with a standard Reply From which can be found at Annex 1 of the protocol.
  • The creditor must wait 30 days from the date of the Letter of Claim before they may issue court proceedings. However, the creditor must take into account that a letter of response may have been posted before the end of the 30 day period and may arrive after the 30 day period has expired.
  • The creditor should not issue court proceedings less than 30 days from receipt of the completed Reply Form from the debtor or 30 days from the creditor supplying any documents requested by the debtor, whichever is the later.
  • If a debtor requests a document or additional information, the creditor must provide the said document or information or at the least provide an explanation as to why the document or information is not available, within 30 days of receipt of the request.
  • If the debtor has responded to the Letter of Claim and agreement cannot be reached using any of the forms of ADR (set out below), then the creditor should give the debtor at least a further 14 days’ notice of their intention to start court proceedings.

Alternative Dispute Resolution

If the parties fail to reach an agreement, then before proceedings are served, both parties must attempt to resolve the dispute through the use of Alternative Dispute Resolution.

ADR takes many forms and can include:

  • A meeting, discussion or negotiation;
  • Mediation;
  • Arbitration.

If you have any queries regarding the new Protocol or with issuing proceedings/recovering a debt, do not hesitate to contact a member of the Dispute Resolution Department who will be able to provide expert advice in relation to your claim.

Mike Acton  10th November 2017