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REPOSSESSIONS GROUP: MEETING ON 11 FEBRUARY 2009

MINUTES OF MEETING

Present

Adrian Stalker (Chair)

Paul Brown, Legal Services Agency

Gavin Corbett, Shelter

Keith Dryburgh, Citizens Advice Scotland

Paul Fenn, Home Loan Management

Kennedy Foster, Council of Mortgage Lenders

Yvonne Gallacher, Money Advice Scotland

George Gretton, Scottish Law Commission

Mark Higgins, Irwin Mitchell

Sarah O’Neill, Consumer Focus Scotland

Hazel Thoms, Scottish Legal Aid Board

George Way, Law Society of Scotland

In attendance

Shona Stephen, Housing Access and Support Division, Scottish Government

Stephen Sandham, Housing Access and Support Division, Scottish Government

Jackie Walder, Housing Access and Support Division, Scottish Government

Struan Horsburgh, Housing Access and Support Division, Scottish Government

John St Clair, Legal Directorate, Scottish Government

Edythe Murie, Legal Directorate, Scottish Government

Diane Dunn, Accountant in Bankruptcy

1. AdrianStalker introduced himself and opened the meeting. There were no apologies. Following introductions, Stephen Sandham gave a presentation on the background (Paper 1) to the establishment of the Repossessions Group. This covered the projected rise in the number of households facing re-possession, the Scottish Government’s response to date and the remit given to the group. The following issues were thencovered in discussion:

  • The FSA and its role in ensuring that lenders review their arrears policies and treattheir customers fairly.
  • The Mortgage Rights Act, and initial views on scope for change.
  • The need for better understanding of statistics and trends around legal applications and re-possessions in Scotland, and the potential for Section 11 of the Homelessness etc (Scotland) Act 2003 to contribute to this along with work underway related to the Mortgage Rights Act.
  • The impact of securitisation of debts on lenders.
  • The increase in workload for debt advice services and the potential for further investment in face to face advice servicesin the light of the increasing number of repossessions.
  • A better understanding of whether those who seek debt advice at an early stage are less likely to face repossession.
  • The impact of negative equity on lenders’ willingness to avoid repossession and selling the property at a loss.
  • The impact of effective representation on the outcome in repossession cases.

Action Points:

Kennedy Foster to provide a paper on regulation of lenders and the lenders’ perspective for next meeting.

Paul Fenn to provide additional data on securitised mortgages.

YvonneGallacher/Keith Dryburgh to provide data on numbers of clients seeking face to face debt advice.

2. Adrian set out the current legal context (Paper 1). The following points were made in discussion:

  • The two voluntary pre-action protocols in Scotland work because they provide a benefit to each side in a legal case.
  • The Civil Courts Review is considering the issue of pre-action protocols.
  • A mapping of the civil supply of solicitors and in-court advice is currentlyunderway. This should show how the current provision is working and how it might work better.
  • There are marked variations across the country in the numbers of people accessing legal aid.
  • Anecdotally, no more than 10% of repossession actions have a Mortgage Rights Act application. The documents involved are complex, and many see the costs of taking action as too great.
  • Remortgaging had historically been an option to address re-possession,but this is now difficult for those with adverse credit histories.
  • There is a need to be careful not to develop a system that discourages lending.
  • There is concern about recent increases in the sale and rent back market. The UK Government has announced a consultation.

3. Adrianoutlined the remit, membership and work programme of the Group (Papers 2 and 3). The following points were made in discussion:

  • The first part of the remit should be considered first to ensure a conclusion by end April. The second part may continue into May.
  • Consideration of issues related to tenants and rent arrears could be carried out under the second part of the remit, as an ongoing issue. The Debt Action Forum should be asked whether this sat better with its remit.
  • It may be necessary to establish smaller groups to work on some issues between meetings, rather than work on everything at every meeting.
  • Minutes will be prepared for agreement at the following meeting. They will then be published on the Scottish Government website.

Action Points:

Adrian Stalker to report to Debt Action Forum on possibility of considering issues relating to tenants and rent arrears.

Jackie Walder to note that final report to be the last item on the agenda for the next meeting.

4. Adrian introduced his paper (Paper 4)whichproposed a structure for discussing the issues which the group had to address. The following points were made in discussion:

  • The possibility of a debt advice and information pack being put out at an earlier stage to make people aware of the Debt Arrangement Scheme.
  • How mortgage rescue schemes are best brought to the attention of borrowers.
  • Need to view the issue from the perspective of an individual going through the process, from the point of going into arrears and covering interaction with lenders, to identify the current gaps and how to best address them.
  • Consideration of the links between the Mortgage Rights Act and Section 40 of the Bankruptcy (Scotland) Act 1985, while noting this may need to be considered over the longer term.

5. The Group agreed the importance of taking a holistic approach, encouraging people to access independent advice at an early stage, but also focusing on ability to defend actions effectively if matters did get to court.

Action Points:

Group members to submit to Shona Stephen or Stephen Sandhamany suggested areas for discussion.

Hazel Thoms to provide a paper on current situation with legal advice and representation.

Jackie Walder to circulate Shelter’s recent paper on evictions by social landlords.

Adrian Stalker to raise the linkages between the Mortgage Rights Act and Bankruptcy Act with the Debt Action Forum.

6. George Way introduced the Law Society’s position paper (Paper 5). The Law Society had been asked to consider a voluntary pre-action protocol. but was of the view that a protocol without teeth would not be useful. The Sheriff Court Rules Council was amenable to making the forms used in summary applications more user friendly.

7. The Group agreed that future meetings should start at 11am to allow more time for discussion. The next meeting on 4 March should first consider the wider advice context and then move on to issues related specifically to lenders. It was agreed that the Finance and Leasing Association should be invited to join the Group.

Action Points:

Stephen Sandham to invite the Finance and Leasing Association to join the Group.

Housing Access and Support Division

February 2009