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The New Fixed Recoverable Costs Scheme - How will this affect you, our Debt Recovery clients?

View profile for Catherine Rickett
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For most claims issued at Court after 1 October 2023, a new fixed recoverable costs regime will apply. The regime will apply to most debt recovery claims with a value of £10,000 up to £100,000. Where claims are valued at £10,000 or less (and thus fall into the small claims track), nothing will change and costs are not usually recoverable.

The fixed recoverable costs regime
The new regime provides specific tables for recoverable costs as follows:

The regime introduces four complexity bands with an associated grid, showing the costs allowed for each stage of the claim reached, before the parties settle their dispute or go to Trial. Band 1 will be for least complex cases, including road traffic accident (RTA) related, and defended debt claims, whereas Band 2 will provide for RTA claims with a personal injury and other personal injury claims. Band 3 will be for employers/public liability claims, possession, housing disrepair claims and other money claims, and Band 4 will be for claims involving the most complex issues of law or fact. The costs allowed in each band are gradually increased to reflect this.

Whilst each claim turns on its own facts, it is probable that most disputed debt claims will be placed into Band 1 and so, for the purpose of this article, this is the band we are going to focus on.

It must also be noted that:

  1. It is only usually the successful party that can recover its fixed recoverable costs from the unsuccessful party. However, whether costs are recoverable at all is down to the discretion of the Court; and
  2. It may be that clients actual legal costs outweigh the recoverable costs under the new regime. Clients therefore need to weigh up whether it is cost effective to proceed prior to issuing proceedings.

Prior to issuing proceedings
When a case has been settled prior to issuing proceedings, the Defendant is usually required to pay fixed costs of at least £580* (Band 1). Clients will still be entitled to recover interest and late payment compensation on top of their fixed costs. The fixed costs could be higher if the claim is complex enough to fall into a higher band**.

After issuing proceedings
The most significant change in recoverable costs will be when the claim is issued but the case settles or is discontinued before Trial.

When proceedings are issued and they are defended, then the Court will have to allocate that claim to an appropriate “track”. Any claim that is between £10,000 and £24,999 will be allocated to the “Fast Track” and any claim that is between £25,000 and £99,999 will be allocated to the new “Intermediate Track”. Any claims over £100,000 will fall outside the fixed recoverable costs regime. At the same time, the Court will have to decide which Band to allocate claims falling in the “Fast Track” or “intermediate Track”.

If a case is settled on or after the date that the Court issues the claim, but before the date that the court allocates the claim (as above), the fixed recoverable costs in Band 1 will be £2,100. This will increase to £2,500 if the case settles on or after the date that the court allocates the claim to a “track”, but before the date that the court lists the claim for Trial.

If the case settles on or after the date that the court lists the claim for Trial, but before the Trial takes place, the fixed recoverable costs in a Band 1 claim will be £3,800. If disposed of at Trial, the successful party will also be able to recover advocacy fees which range between £580 and £2,000 depending on the value of the claim.

Whilst dealing with an undefended debt recovery claim has always been a cost-effective procedure using the Roythornes’ Debt Recovery team, it is now extremely important to consider the changes to recoverable costs before issuing proceedings. There is always the possibility that the matter becomes defended and accordingly clients should weigh up whether it is proportionate to issue proceedings, whether they will succeed and whether their actual costs may outweigh the fixed recoverable costs they may recover from the Defendant.

If you require any further information or assistance, please do not hesitate to contact us.


*If a client is registered for VAT purposes, we cannot recover VAT from a paying party.

** Depending on the complexity of the case, this could reach £2,600 + an amount equivalent to 15% of the damages + £510 per extra defendant (Band 4).