The value of transparency in civil enforcement

The value of transparency in civil enforcement.

Welcome to our blog series, exploring the key topics being discussed in the enforcement industry. In Part 8, Dr Wendy Kennett of the Compliance, Adjudication and Review of Enforcement Panel, discusses how, in the light of the regular calls for further regulation of the enforcement industry, some comments on the experiences of other countries may be of interest.

Privatisation of enforcement has occurred in many European countries in the last twenty years. This has been accompanied by the introduction of competition between enforcement agents and the increased use of privatised agents in the collection of public law debts. Following these experiments, new regimes of heightened regulation have gradually been established. To a significant extent, however, this has occurred in countries in Eastern and Southern Europe that are wrestling with a wide range of regulatory issues. Regulation has been required to tackle financial irregularities and alleged corruption. These experiences are therefore of rather limited interest in England and Wales.

In Western Europe, on the other hand, the existing privatised enforcement professions have long had a cosy relationship with their respective Ministries of Justice. In recent times, however, the drive for deregulation and increased competition has led (or is leading) to radical changes. One aspect of these changes is enhanced supervision by external agencies. Again, however, the focus is mainly (although not entirely) on financial supervision. In the Netherlands, for example, the removal of territorial boundaries to the competence of enforcement agents, led to cut-throat competition, and the abuse of client accounts by businesses on the verge of bankruptcy. Reliance on professional bodies for financial self-regulation has proved misplaced. But in respect of the conduct of civil enforcement agents, arguments for enhanced external regulation are less prominent. Rather, there has been pressure for reform on several different fronts.

Firstly, the recognition that civil enforcement is a public task and that the State needs to exercise its role as public manager (which potentially conflicts with its role as major creditor). It should adopt exemplary practices as a client for enforcement services, but should also steer the relationship between the different organisations involved in combatting debt and poverty; including civil enforcement organisations and debt advice organisations.

Secondly, ensuring that fees, including amounts recoverable from the client, provide appropriate incentives and reward the work required from enforcement agents to perform their public functions. There is debate around the relative importance of efficiency as compared to other objectives, such as the signalling of vulnerable debtors and the creation of debtor profiles.

Thirdly, streamlining cases concerning each debtor, so that the debtor is not confronted by several different enforcement agents competing against one another for the available assets. Competition thus remains important in respect of the share of public and private sector work accruing to each civil enforcement business, but different mechanisms are increasingly being introduced that channel the claims concerning individual debtors through a single state agency (as the client for enforcement services), or a single civil enforcement business.

Lastly, promotion of greater transparency of the civil enforcement profession. This is being achieved in various ways. The Dutch professional body has adopted regulations on aspects of practice and conducts its own audits. Disciplinary procedures have been strengthened and decisions are reported. The professional body has also striven to build relationships with other professions, public authorities and debt advice organisations and has commissioned research highlighting defects in the enforcement system. As a result, the standing of the profession has improved significantly over the last ten years.

There are very considerable differences between the enforcement systems in the Netherlands and England and Wales (as well as their positioning relative to public law creditors and debt advisors). Nevertheless, these issues and reform ideas chime with some of the developments on this side of the Channel.

In particular, CIVEA has taken up the challenge to improve the transparency of the profession. Since I am convinced that improved transparency plays a key role in achieving consistency, highlighting aspects of legal regulation that are difficult to implement, ratcheting up standards (where required) and advancing public appreciation of the challenges faced by the profession, I welcomed the creation of the CARE Panel and my invitation to participate in its work.

Dr Wendy Kennett is a Senior Lecturer in the School of Law and Politics, Cardiff University. She is part of the Compliance, Adjudication and Review of Enforcement Panel (CARE), who independently assess civil enforcement activities to ensure they are conducted professionally, efficiently, effectively and lawfully.

Want to know more? Please see our recent post from fellow CARE panel member, Caroline Wells, on how the enforcement industry embraces change.