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New pre-action protocol for debt claims

18th September 2017 by Rob Kelly

Categories: What's New?

A new pre-action protocol for debt claims, “the Protocol”, will be in force from 1 October 2017.  It will apply to any business (in limited form, partnerships, sole traders and public bodies) claiming payment of a debt from an individual (also including sole traders).  Business creditors will need to comply with significantly increased obligations prior to commencing a claim.

The aims of the new protocol are:

  • To encourage early communication and exchange of information between parties
  • To resolve the matter without the need for court proceedings
  • To encourage the parties to act reasonably and proportionately

Compliance with the new protocol will be essential if proceedings are issued and either party wants to recover a contribution towards their costs from the other side.

The principal steps under the new protocol will be as follows.

Letter of claim

The creditor must send a letter of claim including;

  1. The agreement under which the debt arose, details of any installments that have been offered or paid along with an explanation as to why they are not acceptable and details about how the debt can be paid
  2. Information about the debt – the amount and whether there is any interest or admin charges
  3. Up to date statement of account
  4. An information sheet template
  5. Reply form and address of where it should be sent
  6. Financial statement for the debtor to complete showing their financial situation.

Response by the debtor

The debtor should complete the reply form sent by the creditor.

The creditor will no longer be able to decide how long to give a debtor to reply: the creditor cannot commence proceedings until  30 days from receipt of the completed reply form or provision of any information that the debtor may request, whichever is the latest.  The period may be extended if the debtor indicates that they are seeking debt advice.

The parties are required to try and reach agreement for payment by instalments based on the debtor’s income and expenditure and the financial information from which the debtor completes.

Disclosure of documents

The debtor is asked on the reply form to send any relevant documents to the creditor with its reply but the debtor may request the creditor to supply documents or information which will enable them to understand each other’s position.

The creditor must supply the information or documentation within 30 days or explain why it is not available.

Consider alternative dispute resolution (ADR)

If no agreement can be reached, the parties are encouraged to consider ADR procedures but are warned to take into account the potential costs of mediation (if this is the method which the parties choose) compared to the amount of the debt.  If agreement is reached, the creditor should not commence proceedings while the agreement is being complied with.  If the debtor breaches the agreement and proceedings become necessary at a later date, an updated letter of claim must be sent and the new protocol complied with again.

Taking stock

This is an entirely new obligation and requires the parties to “undertake a review of their respective positions to see if proceedings can be avoided and, at the least, to narrow the issues between them”.  Where the parties have exchanged a letter of claim and a reply but no agreement has been reached the creditor must give the debtor at least 14 days’ notice of its intention to commence proceedings unless there are exceptional circumstances which justify the earlier commencement of proceedings.

Compliance with the new protocol

If proceedings are commenced, the court will have regard to any non-compliance with the new protocol.

Comment: The new protocol imposes more burdens on creditors to provide information and comply with requests for information from debtors.  No longer will creditors be able to send a “seven day letter” and immediately commence proceedings if they want to avoid the court imposing sanctions for failure to comply with the new protocol (which could include the imposition of a stay of the proceedings until the new protocol has been complied with).

If you would like further information please contact Rob Kelly.



This article provides information and comments on legal issues and developments of interest.  The contents of this article do not constitute legal advice, is not a comprehensive treatment of the subject matter covered, and should not be relied on as such.  Legal advice should be sought about your specific circumstances before taking any action with respect to the matters discussed.

Questions relating to this article should be addressed directly to the author.

Rob Kelly

Senior Associate — Dispute Resolution

Direct dial: 01202 755217


  • “A first choice for truly contentious Litigation in Automotive and Asset Finance and Leasing. His pure skill in tricky work wins through time and again and adds real value compared with the so called 'top tier' litigators. Truly capable, amenable and commercially minded business partners, the 'master chessmen' of their specialty.”

    Paul Maxted, previously the In house Legal Adviser and Company Secretary nearly 20 years, all Financial Services related companies in UK for Daimler, Mercedes-Benz

  • “I have had the pleasure of working with several members of the team at Laceys regularly over a period of years. I found Rob Kelly in particular, who worked on a successful litigation case for me over a period of several years to be outstanding in all aspects of the work he undertook, and the manner in which he did it. I now consider him a friend. I would not - and have not - hesitated to recommend Laceys to my family and friends, and continue to use them for all legal matters.”

    Dan Collins

  • “ I just wanted to thank you for your great work on the professional negligence case and other cases you have represented Indian Ocean and Tiien through the last few years.”

    Mehdi Vahdati, Director and Proprietor - Indian Ocean (Bournemouth) Limited

  • “I've worked with a fair few lawyers over the years and Rob Kelly is the most on the ball and efficient lawyers I've ever come across. I'm looking forward to working together for many years to come.”

    Roger Woodall, CEO - Diamond Sporting Group

Rob is an Associate Member of the Chartered Institute of Legal Executives (September 2009).  Rob also holds an LLB (Hons) degree in law.  He successfully completed training as a mediator under the ADR Chambers / Harvard Law Project Scheme and was one of the first mediators to have been appointed an IMI Certified Mediation Advocate in the UK with a commercial practice.

Rob specialises in dispute resolution through litigation, arbitration and mediation, with particular emphasis on contractual disputes, claims involving allegations of professional negligence (which he has prosecuted on behalf of commercial and private clients and defended on behalf of insurers, re-insurers and Lloyd’s syndicates). He is regularly instructed in connection with substantial disputes involving contractual, professional negligence, contentious probate issues.  Rob also deals with contentious property and landlord and tenant issues.

Rob’s style is a mix of listening, asking (tough) questions, diplomacy and reality testing. He’s interested, flexible, and pragmatic. He offers a common sense, realistic approach to assist his clients in searching for solutions to their disputes and brings straight talking and integrity to his work.

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