Why Northern Ireland should consider updating its Pre-Action Protocols

Cat Song is a second-year law student from Fordham University School of Law in New York, NY.  She is currently working at Housing Rights Service as a legal research intern studying comparative housing law in the different UK jurisdictions.   

In the first of a series of articles for Housing Rights Service, Cat discusses the importance of Pre Action Protocols in the legal repossession process and considers whether those in operation in Northern Ireland are sufficient. 

Evaluations of government interventions in other UK jurisdictions have concluded that while mortgage rescue schemes are very helpful, other programs have had a greater impact on containing national repossession rates.  The most influential factors have been

• voluntary lender forbearance,
• continued low interest rates, and
• increases in access to monthly payment assistance programs like Support for Mortgage Interest (SMI).  

Voluntary lender forbearance can include actions such as working out an alternative payment arrangement, deferring repossession actions, or even deferring payments for a short time period.  Findings show that government-mandated forbearance is less effective, although it is the existence of certain government-run programs that have been successful in encouraging voluntary lender forbearance.  Lenders' willingness to forbear has been encouraged by two programs; a national mortgage rescue scheme, and extensive, multifaceted pre-action protocols.  These programs have not been shown to significantly effect repossession rates, but they have encouraged lenders to hold off on taking legal action. 

Pre-action protocols

A pre-action protocol lists all the actions that must be completed before a lender is allowed to begin the application process for a repossession court hearing.  All UK jurisdictions have legislation on these protocols.  England, Wales, and Scotland have also mandated that lenders fill out a checklist and present it to the court as proof that they have complied with all procedures.  Without this proof, a party will not be able to move forward with any court action.  The Republic of Ireland does not use a checklist, but their Mortgage Arrears Resolution Process (MARP) requires written proof that the process has been complied with before a borrower is allowed to participate in other intervention programs. 

The situation in Northern Ireland

Northern Ireland has a set of pre-action protocols, although lenders are not required to prove that they have complied with these.  Language in the protocols states that parties should be ready to verbally explain the actions that they have taken to comply.  If a judge is not satisfied with compliance, then he will take this into account when arriving at a decision, either generally or with regard to costs. 

Consider the following scenario:  a borrower in Northern Ireland who has his working hours decreased asks his lender if he can make interest-only payments for a six month period.  The lender must send a letter to the borrower within 10 days of the request explaining its reasons if it decides to refuse permission.   

In a mandatory checklist jurisdiction, this lender would be required to

• record the borrower’s offer and the date on which they made the offer
• detail reasons on the checklist if it decided to reject the offer
• provide a carefully-prepared written document detailing all the pre-action steps it has taken and listing the reasoning behind its decisions.

The lender is incentivized to follow each protocol and to provide proof that it has done so. 

However, in Northern Ireland there is no checklist to follow.  This could cause problems for the borrower who will not necessarily realise that he should bring the lender's refusal letter to court.  If the lender didn't respond to his request, the borrower may not realise that informing the court of this could impact on the outcome of proceedings.

Difficult to sanction without evidence

In Northern Ireland, it would be difficult to sanction any party that willfully ignored the protocols; there is no proof that the party has complied, and often times, there is also no proof that it has not complied.  

Mandatory checklists in pre-action protocols are a big part of the repossession process in other jurisdictions.  These same jurisdictions have also experienced some success in stabilizing their repossession rate.  Due to the importance of compliance with pre-action protocols, Northern Ireland should consider updating its pre-action protocol legislation to include a requirement for written proof of compliance.

Read Cat's other articles