We are approaching the end of what has been an unprecedented year and it is now time to look ahead to 2021. As Chair of Registry Trust, a non-profit organisation, one of my roles is to ensure we fulfil our aim of providing ‘public data for public good’. One way we want to do that is to contribute to the collective efforts to build back a fairer, more inclusive economy as society recovers from the impact of Covid-19. Specifically, we have a critical role to play in re-building credit and wider financial inclusion.
A well-functioning lending sector will be integral to economic recovery and re-building household finances. What I mean by a ‘well-functioning’ lending sector is one that provides access to fair and affordable credit to future borrowers and behaves fairly and responsibly towards borrowers with existing and historic debt problems.
As the non-profit organisation which operates the Register of Judgments, Orders, and Fines, our data is central to that well-functioning lending sector. It is in the interests of all – consumers, businesses, creditors, regulators, credit reference agencies, and policy-makers – that this data paints the clearest picture possible of the extent and nature of problem debt. However, there are some aspects of the existing County Court Judgment (CCJ) process which could cause unintended harm to households, and hold back efforts to re-build credit and financial inclusion in the post-Covid 19 world.
Our main concern is about the way the levels of ‘outstanding’ judgements (those that are not cancelled or marked as ‘satisfied’) listed on our public Register (www.trustonline.org.uk) has increased over the years. But, we also have concerns about the way the current system does not recognise efforts by made by hard pressed borrowers to repay their outstanding debts. Moreover, the fact that the name of the claimant is not included in the Register of Judgments for England and Wales (by far the largest jurisdiction) means it is difficult for consumer protection regulators to differentiate between creditors who treat vulnerable borrowers fairly, and those who are more aggressive at enforcing debts. This lack of data transparency also means the funding of debt advice may not properly reflect the source of problem debts.
We believe that there are comparatively simple solutions to addressing the in-built unfairness in the CCJ process. These small changes could have a big impact and we are calling for 2021 to be the year when long-awaited reform is made to protect citizens and help them re-build their finances.
1.Creditors should be responsible for having CCJs marked as ‘satisfied’ on the public Register of Judgments
It is still not well known that if a CCJ debt is repaid in full, the defendant is then required to provide proof of payment to the courts before it will be marked as ‘satisfied’ on our Register. This may then affect the individual’s ability to obtain credit and could impact decisions around employment, housing and more, for up to six years, which could have a big impact on their financial health and wellbeing. We have been campaigning throughout 2020 to educate consumers and businesses in how to ‘get satisfaction’, but we feel that it is unfair that the responsibility lies with citizens who may not go through the process for a range of reasons from lack of awareness to mental health issues. We are therefore proposing the simple solution of the creditor (claimant) informing the court service or Registry Trust that full payment had been received, ensuring that CCJs are marked as satisfied and bringing consumers back into the mainstream financial system for the benefit of the wider economy.
2.Partial settlements of CCJ debts should be recorded on the public Register of Judgments
Another reason for CCJs not being marked as ‘satisfied’ on the public Register is that there is currently no system for entering partial settlement information, meaning that when a defendant enters into an agreement to pay back what they can, the full amount remains as an outstanding judgment on their record. Again, this seems unfair on citizens who gain no recognition for the payments made towards a CCJ debt, even when partial settlement has been agreed with the claimant. It seems reasonable that on receipt of a partial settlement from a debtor for an outstanding CCJ, the claimant should inform HM Tribunal & Courts Service (HMCTS) or, where relevant, Registry, and the debt should be marked as ‘partially settled’ or ‘satisfied’ on the Register
3.The Register of Judgments in England & Wales should contain the name of the claimant
When it comes to greater transparency on the public Register of Judgments, we also believe that the name of the claimant should appear in England & Wales as is already the case in Scotland and Northern Ireland. Currently, the Register of Judgments for England & Wales focuses on information about the defendant/debtor. However, if claimant information were included, the data could have an additional use for identifying creditors that are most aggressive in using enforcement action. This would inform both regulation and debt advice funding, holding creditors to account and addressing the potential harm caused to citizens.
We are in dialogue with organisations from across the credit and debt landscape to lobby for these changes and we will keep you updated on progress. Key stakeholders who support our proposals should get in touch on firstname.lastname@example.org to discuss how we can work together on pursuing them further.
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