The Covid 19 pandemic has been, as many have already pointed out, an unprecedented time and as we start to see some return to normalcy, the problems it has caused will continue to reverberate for some time to come. .
The health and well-being of individuals and families had to be the priority, and it remains so. However, there has been an impact on just about every area of life, including personal finance, the laws of the land, and ultimately the economy at large.
One particular area that has been affected, and has even seen significant changes thereafter, is that of possession procedures.
Given the severity of the pandemic and related economic issues such as foreclosures and holidays, it was no surprise that lenders, through their own policies and approaches and government direction, essentially had put the brakes on actions. Expected, and the right thing to do.
However, customer issues that might have existed before the pandemic, have grown during the crisis and those that are in preparation still need to be addressed, and one of the major changes that has taken place has been the introduction of temporary arrangements in September 2020 regarding possession proceedings in England and Wales. These are expected to remain in place until November 2021.
These changes were contained in the Rules of Civil Procedure and the new provisions were known as “General Arrangements”.
In short, the provisions meant that E&W lenders were to provide the courts with detailed information on the impact of the pandemic on their clients or dependents.
One of the most notable changes has been the requirement for a review date in repossession proceedings after issuance and service of a possession request.
The goal was to provide the lender and the client with a specific time to discuss the matter and give them the opportunity to try and come to an agreement before the matter continued. It is important to note that the review date is not a hearing date – parties do not appear before a judge. However, the judge can contact either or both parties by phone or video.
On the review date, the court will review and examine the documents and electronic packet filed by the lender and, after doing so, will determine whether to assign a merits hearing, prior to the first possession hearing, or provide some other business leadership.
So far the system is well established and working well. The review date certainly provides the initial opportunity for each party to try to resolve the issue. Everything is fine, but – and this is a fairly important but – there were some issues.
There have been instances where judges have granted possession orders on a review date which creates an inconsistency and is simply incorrect. There were delays and additional costs, and the level of telephone engagement of the Court and clients or their advisers was relatively low.
In addition, few cases have resolved by the review date, which at the very least raises questions about their effectiveness and it appears that the intention of the review date to be a chance for the client. getting advice and coming to a settlement was not easy in training.
There is certainly a consensus that the system reinforces the element of fairness to customers who are having difficulty and there is no doubt that everyone would like to offer customers the opportunity to engage. It should also be noted that the profile of these restart cases has generally been that of customers in arrears before Covid. It is therefore reasonable to conclude that the lack of commitment on the review date may not be typical compared to the profile of more current cases.
Of course, these changes are just one of many that lenders have had to adjust to and with November on the horizon, the looming question must be, what next?
If the temporary arrangements are not extended beyond November and the requirement for a review date is no longer necessary, what happens after that?
Will lenders just send a letter to their clients to encourage negotiation? Will a formal meeting always be required? Or are we going back to the pre-Covid processes?
The government obviously has a lot of work to do right now, but that is not reason enough for last minute decisions to be made on this most important subject.
That said, in the absence of further guidance, lenders will at least want to attempt to secure a similar undertaking before any court hearing and the time to start speaking should be as soon as possible.
Myra Scott is a Partner and Head of the Lender Services Practice Group at Aberdein Considine.