The Pre-Action Protocol for basic Debt Claims is now (just over) a year old. This protocol applies to unsecured loans, credit card and overdraft debt and business debts due by individuals such as sole traders (but not other business debts). Mortgage and certain other debts are covered by other arrangements.

When introduced, the protocol made significant changes - for the first time, it formally required creditors to provide debtors with a letter of claim, prior to proceedings, including the amount of the debt and details of any interest and charges. Customers due to pay are given 30 days to respond to the letter of claim and failure to do so allows creditors to issue court proceedings, provided they have given 14 days' advance notice. For the first time, the protocol set out a requirement that if a payment plan was agreed and then broken, a new letter of claim had to be sent.

So what has happened in practice? The one thing that has certainly occurred is a substantial increase in the amount of paper most customers are receiving. There is a particular increase at the pre-litigation stage and if anything, this can lead to greater concern on the part of customers about the seriousness of the action they are to face. Whether the copious documentation has increased understanding across the board is a more difficult question - in general, our view is probably not.

The extended timescales do mean that more cases resolve prior to court proceedings. However, it may be asked whether these fixes would have occurred within similar timescales in the past anyway - but the avoidance of unnecessary court action on this subset of matters is certainly welcome.

What are less welcome for creditors are the substantially extended timescales for progressing activity against those customers who have no intention of paying. As the protocol is reviewed going forward, consideration should be given to tightening of the 30 day period - most reputable creditors have no difficulty with 14 days’ notice of litigation, but that earlier 30 day time period does seem excessive.