What a controlled goods agreement is and what breaking one means

Short answer

When an enforcement agent takes control of goods, one of the four ways of doing it is to enter into a controlled goods agreement with the debtor. Paragraph 13(4) of Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 defines it: an agreement under which the debtor is permitted to retain custody of the goods, acknowledges that the enforcement agent is taking control of them, and agrees not to remove or dispose of them, nor to permit anyone else to, before the debt is paid. In practice it is the written list of goods, signed by both sides, with a repayment arrangement attached. Keep to it and the goods stay where they are. Break it and the agent may re-enter, remove the goods and sell them, and on a High Court writ the second enforcement stage fee becomes recoverable.

The law

Taking control. Paragraph 13(1) of Schedule 12 gives the agent four ways to take control of goods: secure them on the premises where they are found; if found on a highway, secure them there or within a reasonable distance; remove them and secure them elsewhere; or enter into a controlled goods agreement with the debtor. Paragraph 14(1) lets the agent enter relevant premises to search for and take control of goods, and paragraph 16(2) lets the agent re-enter premises to inspect controlled goods or to remove them for storage or sale. Paragraph 19A deals with re-entry where goods under an agreement the debtor has breached are concerned; regulations prescribe the notice that must be given first.

What the agreement must contain. Regulation 15 of the Taking Control of Goods Regulations 2013 applies where a controlled goods agreement is entered into under paragraph 13(1)(d). Under regulation 15(2) it must be in writing and signed by the enforcement agent and by the debtor, a person authorised by the debtor, or a person in apparent authority to sign for the debtor. Under regulation 15(3) it must contain: the name and address of the debtor; the reference number or numbers and the date of the agreement; the names of the persons entering into it; a contact telephone number and address, and the days and hours, at which the agent or the agent's office may be contacted; a list of the goods of which control has been taken, described well enough for the debtor to identify them, including where applicable the manufacturer, model and serial number, for a vehicle the manufacturer, model, colour and registration mark, and otherwise the material, colour and usage and any other identifying characteristic; and the terms of the repayment arrangement for the sum outstanding. Regulation 15(4) requires a copy of the signed agreement to be given to the signatory at the time, and regulations 15(5) and (6) require copies to the debtor where someone else signed.

The fee consequence. Regulation 4(5) of the Taking Control of Goods (Fees) Regulations 2014 governs High Court writs. Where the debtor pays in full, or enters a repayment arrangement or a controlled goods agreement that is not breached, only the first enforcement stage fee is recoverable. Where the arrangement or agreement is breached, or none is entered into, both the first and the second enforcement stage fees are recoverable, the first even though the first stage did not apply. The agent may not advance to the second stage until the debtor has had another opportunity to pay in full or to enter a repayment arrangement or controlled goods agreement.

The costs

On a High Court writ the first enforcement stage fee is £200 plus 7.5% of the sum above £1,200; the second enforcement stage fee, which a breach brings in, is £520. If the goods are then removed and sold, the sale stage adds £550 plus 7.5% above the threshold. On a County Court warrant there is a single enforcement stage fee of £247 plus 7.5% above £1,900, with sale at £116 plus the percentage. Under regulation 4(1) the fees, and a sum equivalent to VAT where the creditor is not VAT-registered, are recoverable from the debtor. The fee calculator shows the difference between keeping and breaking the agreement for any debt.

What happens next

1. At the visit. The agent lists the goods, the debtor (or an authorised person) and the agent sign, and the repayment terms are written in. The debtor keeps a copy there and then.
2. While it holds. The goods stay in the debtor's custody. They must not be sold, given away, hidden or moved, and nobody else may be allowed to do so. Payments follow the written arrangement.
3. If it is broken. The agent may re-enter to inspect or remove the goods (Schedule 12 paragraph 16), after giving the notice the regulations require under paragraph 19A, and on a High Court writ the second enforcement stage fee is added. Removal leads to the sale stage, with its own notice periods before sale.
4. If it cannot be kept. A debtor who cannot meet the arrangement should contact the agent's office before missing a payment, using the contact details the agreement must contain, and take free debt advice. The debtor rights page and the enforcement timeline cover the rest of the sequence.

Where to get help

A debtor asked to sign a controlled goods agreement can get free, independent advice from National Debtline on 0808 808 4000 or Citizens Advice before and after signing. A complaint about how an agent took control of goods goes first to the enforcement firm and then to the Enforcement Conduct Board.