The Pre-Action Protocol for Debt Claims

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management

12-06-2017

• The final version has now been released and it has been confirmed that this will come into force on 1 October 2017. The Protocol aims to encourage early communication, resolution without court proceedings and acting in a reasonable and proportionate manner. It will apply to letters before claim sent to debtors on or after 1 October 2017 if they are individuals or sole traders

• An enhanced 'Letter of Claim' is required, including details of the amount of the debt, dates and parties to a written contract, what was agreed in respect of any oral contracts, details in respect of any assignment and details of how the debt can be paid.

• the letter of claim must also enclose:
   
  • an Information Sheet (Annex 1 to the Protocol); 
  • a Reply Form (Annex 1 to the Protocol); and  
  • a Financial Statement form (an example is provided at Annex 2 to the Protocol).

• The Letter of Claim should also enclose an up to date statement of account for the debt, the most recent statement of account together with information on interest and/or charges incurred since issue or where no statement has been provided, state in the Letter of Claim the amount of interest and other charges imposed since the debt was incurred.

• The proposal that a copy of the agreement should also be provided has been rejected. The Letter of Claim will however, need to prominently state that such documents are available upon request

• An individual will have 30 days to reply to the Letter of Claim. If a request for further documentation is made then the creditor must respond to that request, providing the documentation or otherwise explaining why it will not be provided, within 30 days

• In the event of a dispute, Alternative Dispute Resolution (ADR) should be considered. In some cases, especially where the debt is large, mediation might be appropriate

• The court will take into account non-compliance with the protocol when giving directions for the management of proceedings and when making orders for costs 

• flowcharts for the applicability and process of the Protocol are set in the document below

Download a detailed copy of our information sheet on 'The pre-action protocol for debt claims' here