By earlier this month approving the Charging Orders (Orders for Sale: Financial Thresholds) Regulations 2012, the Government has confirmed that enforcement of a charging order is permissible where the debt (arising under a CCA regulated agreement) is £1,000 or above.
As the Parliamentary debate confirmed Orders for Sale (the name given to charging order enforcement) are very rare and are usually only resorted to in circumstances where a debtor refuses to take a responsible attitude to his/her liability. They are a separate set of proceedings to the charging order (upon which they are based) and require a separate exercise of discretion by the court.
As the Government had initially proposed a much higher threshold of £25,000 for order for sale applications, creditors will welcome this development. Along with the introduction last year of Section 93 of the Tribunal and Courts Enforcement Act 2007, it has given some certainty to the legal framework which allows a creditor to obtain security for unsecured liabilities.
However, leaving aside any cost/benefit analysis any enforcement decision has to be assessed (and justified) by the issue of regulatory compliance. At approximately the same time as Parliament put an end to the threshold question, the OFT imposed restrictions on the charging order strategy of a major high street bank. Whilst the use of Charging Orders was acknowledged by the OFT (as it did so in 2010) as being a legitimate enforcement tool, it is clear the Regulator expects the individual circumstances of each account holder to be at the forefront of any enforcement decision.
Lenders should not be put off; compliance with a TCF assessment/decision tree for each individual account holder is simply part of the required recovery landscape. On many accounts Charging Orders remain an effective and “fair” means of enforcement.