Part 3: Collecting fines

Ministry of Justice: Performance of the Collections Unit in collecting and enforcing fines.

3.1
The Summary Proceedings Act specifies, in broad terms, the procedures to be followed when collecting and enforcing fines. We expected that the Collections Unit would follow these procedures and have policies and procedures in place to:

maximise opportunities for collecting fines as early as possible;
ensure that offenders were given every opportunity to pay their fines before the fines became overdue and enforcement was considered; and
locate offenders.

3.2
To assess the Collections Unit against our expectations, we visited the Contact Centre sites and a sample of District Collections Units.

3.3
We interviewed staff and observed interactions with offenders. We accompanied Bailiffs on enforcement work and reviewed documents. We also examined the policies and systems for seeking payment, from when a fine is imposed or ordered by the District Court, or an unpaid infringement notice is referred to the Collections Unit.

Overall performance of the Collections Unit

3.4
The revenue from fines collected has grown. For the year ended 30 June 1999, the Collections Unit collected $112 million. At the end of the 2001 financial year, the figure collected was $136 million. For the year ended 30 June 2004, $192 million was collected.

3.5
Despite increasing numbers of fines, the Collections Unit has improved the ratio of overdue to not overdue fines (see Figure 4 – note that overdue fines in this Figure include reparation amounts).

Figure 4
Overdue and not overdue fines 1999-2004 (amount and percentage)

Figure 4.

3.6
Figure 5 shows the total owed in overdue fines at the end of the past 4 financial years, and the average age of the overdue fines.

Figure 5
Overdue fines by source 2001-04

As at 30 June	2001	2002	2003	2004
Court-imposed fines	$48.1m*	$44.8m	$40.0m	$38.4m
Police infringements	$115.3m	$175.3m	$164.4m	$180.5m
Other infringements	$57.2m	$83.0m	$79.2m	$78.1m
Total	$220.6m	$303.1m	$283.7m	$297.0m
Average age of overdue fines*	3.4 years	3.3 years	3.7 years	3.4 years

Note: Figures have been rounded.

* Reparation owed to the victim/s of a crime are included in this calculation.

3.7
As at 30 June 2004, 29% of the overdue fines had been scheduled for enforcement but had not yet been enforced. Payment arrangements had been breached for 9% of the overdue fines, a warrant to arrest the offender had been issued for 9% of the overdue fines, and a warrant to seize the offender’s property had been issued for 9%.

3.8
A quarter of the overdue fines had been overdue since before 1 October 2001, and 44% had remained unpaid (and not under any payment arrangement) for 12 months or more. Vital information, such as a date of birth or a valid address, was missing for 42% of the overdue fines. Forty-three per cent of the overdue fines listed the offender’s last known address as in the Collections Unit’s Northern Region (north of Hamilton).

Resolving fines

3.9
Fines remain in the Collections Unit’s system until they are resolved – collected, or remitted by a Judge or Community Magistrate, or remitted by a Deputy Registrar (see paragraph 2.30). The Collections Unit resolves 30% of fines within one year. After 3 years, 68% of fines have been resolved, and this increases to 87% after 6 years. Ninety-seven percent of all fines imposed before 1990 have been collected or remitted.

3.10
Of the fines the Collections Unit collects in a typical month:

35% relate to fines imposed in the previous 6 months;
20% relate to fines from the 6 months before that;
20% relate to fines from the 12 months before that; and
the remaining 25% relate to older fines.

3.11
Despite the many and varied efforts of the Collections Unit, it is not keeping up with the growth in outstanding fines. Each year, the increase in the amount owed exceeds the amount collected or remitted, and numbers of fines continue to increase.

Performance of the Contact Centre

3.12
Early contact with offenders is critical to the successful collection of fines. The Collections Unit has a policy that requires staff, when seeking to collect a fine, to first try to contact the offender to arrange early payment. This priority is supported by the Collections Unit’s training material, which highlights the importance of early contact and provides guidance on effective communication and negotiation.

3.13
Unless an offender arranges payment through a District Collections Unit, the Contact Centre usually makes first contact with offenders. Enforcement cannot start until a fine is overdue, so this early contact is to offer help in arranging payment or obtain early payment. It usually occurs after day 11 of the fine entering the Collections Unit, giving the offender time to comply voluntarily. Contact may occur earlier, and offenders will often telephone the Contact Centre of their own volition.

3.14
Task lists for each Contact Centre staff member require them to follow up fines (for example, when supporting documentation is sought) and breaches of time-to-pay arrangements. Periodic prompts in COLLECT ensure that contact is maintained with offenders and the status of fines is actively monitored.

3.15
Performance measures in the Contact Centre focus on cash targets, early payment, getting fines under time-to-pay arrangements, and unresolved fines. They are monitored closely by Team Leaders. These performance measures underpin the primary role of the Contact Centre to make early, effective contact with offenders to obtain payment.

3.16
The performance measures are supported by job descriptions and performance agreements that highlight the importance of communication and negotiation skills in dealing with offenders. Effective negotiation was an important skill of the Contact Centre staff we interviewed and observed.

3.17
As well as trying to make early telephone contact with offenders, the Contact Centre sends offenders various forms of correspondence, encouraging them to pay their fines. This correspondence includes:

a notice of fine and final notice of fine;
confirmation of time-to-pay arrangements, or copies of attachment orders; and
warning letters, advising that enforcement is imminent if the offender does not pay within a specified time.

Record of contacts with offenders

3.18
Collections Unit staff are required to enter into COLLECT details of all exchanges with offenders, as well as all unsuccessful attempts to make contact. This record provides a history of the Collections Unit’s interaction with an offender. It is important in verifying that every reasonable attempt has been made to contact an offender and arrange payment before the Collections Unit considers enforcement.

3.19
We examined a small sample of offender profiles in COLLECT. We were looking for evidence that, in practice, reasonable attempts had been made to contact the offender to arrange payment, and that the results of these attempts were recorded.

3.20
The notes in COLLECT recorded changes in contact details and employment status, undertakings by the offender to pay by a particular date, and, in cases where time-to-pay arrangements had been entered into, an assessment of the offender’s ability to pay.

3.21
The notes in COLLECT were generally complete and easy to follow. Notes recorded, where necessary, that the offender had been warned that enforcement would follow if the fine was not paid by the due date, and that callers had been informed of Privacy Act constraints on the disclosure of personal details.

3.22
Overall, we were satisfied with the records kept of contact with offenders. Collections Unit staff had either made, or tried to make, frequent contact with offenders. Details of various forms of correspondence with offenders had been recorded in COLLECT.

Conclusions

3.23
Analysis by the Collections Unit has shown that setting up the Contact Centre sites has meant the collection of a greater number of recent, easy to collect fines. This leaves the more difficult fines requiring physical enforcement to the staff in District Collections Units. A review of the effectiveness of the 2002 business case to expand the Contact Centre showed that from May 2003 the Collections Unit has been collecting more fines than projected. The effectiveness of the strategy is continually reviewed.

3.24
We were satisfied that the activities and procedures of the Contact Centre were appropriately focused on early collection of fines, through direct contact with offenders and, where necessary, negotiation. Systems were in place to ensure that the Collections Unit monitored the status of fines and maintained contact with offenders.

Performance of the District Collections Units

Collecting Court-imposed fines

3.25
The Collections Unit deals with all Court-imposed fines from the time they are imposed.

3.26
The District Collections Units are also responsible for attempting to contact offenders with overdue fines (Court-imposed and infringement) and enforcing those fines.

3.27
In our visits to District Collections Units, we examined the effectiveness of the procedures for collecting Court-imposed fines, including how staff contact offenders receiving fines sentences to discuss payment.

3.28
Figure 6 shows the Collections Unit’s performance in dealing with Court-imposed fines.

Figure 6
Performance of the Collections Unit in dealing with Court-imposed fines

	2000-01	2001-02	2002-03	2003-04
Court-imposed fines collected	$29.2m	$22.9m	$27.7m	$31.1m
Court-imposed fines either paid or under arrangement within 6 months of imposition	67.8%	75.4%	78.2%	87.8%

Court-walkers

3.29
Court-walkers – District Collections Unit staff in Court to make payment arrangements with offenders on the day a fine is imposed – are an important part of the Collections Unit’s strategy to collect Court-imposed fines as early as possible. However, there are times when Court-walkers are not in Court. They may be dealing with an offender, or not available because of other priorities.

3.30
To help address this, the District Collections Units receive from the Court a schedule identifying which offenders received a fine on a particular day. The District Collections Units use this information to contact offenders who were missed by the Court-walker on the day of the Court hearing.

3.31
District Collections Units rely on a close relationship with local Court staff. We found many examples of close co-operation to encourage offenders to pay the fines imposed by the Court. Collections Unit staff also report to sentencing Judges about fines already owed by an offender.

3.32
Generally, arrangements for having Collections Unit staff in Court worked well. However:

it can be difficult to co-ordinate Court-walking with other responsibilities and priorities;
it can be difficult to make early contact with offenders in satellite Courts, where District Collections Units do not have a permanent presence;
in some District Collections Units, electronic access to Court schedules is limited or lacking, making it difficult to assign staff to attend;
with no direct access to COLLECT within courtrooms, District Collections Unit staff cannot retrieve profile information at short notice; and
it is not possible to predict which cases will result in a fine being imposed, so District Collections Unit staff may spend idle time in Court. With access to COLLECT, staff could do other work when assigned to monitor Court proceedings.

3.33
In our view, the Collections Unit should address these issues, which would strengthen its commitment to collecting Court-imposed fines as early as possible.

Recommendation 1
We recommend that the Collections Unit consider options for improving its practices for the early collection of Court-imposed fines, and ensure contact with as many offenders as possible.

Enforcing fines and workload pressures

3.34
District Collections Units have many responsibilities, including, for example, enforcing fines by executing warrants, managing work received electronically, providing a counter service for the public, enforcing civil debts, and serving Court documents.

3.35
This means that District Collections Units must manage their fines collection responsibilities, particularly the work generated electronically by the Collections Unit’s information systems, in the face of competing priorities. For example, the Collections Unit has estimated that, for the 2004 financial year, about 78,000 civil court documents and cases were received or filed, which took up 24% of the staff’s time.

3.36
Limited and competing resources in District Collections Units can delay the enforcement of overdue fines. District Collections Unit staff are the only ones who can physically enforce fines. While time consuming, physical enforcement is necessary and important.

3.37
Revenue targets for the District Collections Units reflect the Collections Unit’s focus on collecting fines. To help meet those targets, the District Collections Units have tried different ways to manage their workloads. We saw useful initiatives to reduce the number of fines awaiting further action, such as joint enforcement between District Collections Units.

3.38
In many cases, an overdue fine has been subject to a warrant issued by a Registrar. Warrants to arrest or to seize property may stay assigned in the COLLECT system for some time before they are executed. When they are executed, many of the addresses visited by District Collections Unit staff seeking to serve a warrant are not correct. Often, an offender left the address some time ago. Although time-consuming, attempts to physically locate the offender must be made – the last known address must be shown to be incorrect before it can be referred back into the system and new attempts made to find the offender.

3.39
After workload issues were raised during field work, we asked questions of the District Collections Managers in the areas we visited. Responses indicated that:

Compared with fines not yet overdue or under arrangement, the Collections Unit gathers little management information about the collection and enforcement of overdue fines.
District Collections Units have taken steps to reduce the amount of electronic fines management work. However, there is concern that successes are short-term, unsustainable, and create additional work for staff already stretched. Projects to reduce volumes also affect the resources available for other work (such as physical enforcement).
The amount of electronic work fluctuates significantly from one month to another, which makes planning difficult.
The electronic work competes with other tasks, some of which are a higher priority.
Managing overdue fines that are scheduled for enforcement is complex. Work volumes are difficult to predict, and involve choosing between related activities – including making arrangements for the payment of Court-imposed fines, serving at the counter, following up on breached payment arrangements, and executing warrants.

3.40
The Collections Unit supplied us with data showing, for each of its District Collections Units and satellite offices:

the total number of fines yet to be collected at the end of each month, from January to June 2004; and
at 30 June 2004, how long fines had been assigned for enforcement.

3.41
Across the District Collections Units, we found significant differences at the end of each month. Possible explanations include how the District Collections Units were allocating resources, the effect of activities in other parts of the business unit (for example, the Contact Centre), changes in the status of fines in COLLECT because of enforcement, and different numbers of fines entering the District Collections Units.

3.42
The age of the fines differed markedly from one District Collections Unit to another. Again, there were several possible explanations, including different strategies taken by individual District Collections Units to collect overdue fines, and the characteristics of particular communities. For example, in communities where work is seasonal, some offenders are likely to be transient and more difficult to locate.

3.43
We were concerned about the allocation of resources in District Collections Units. To make the best use of the District Collections Units, the Collections Unit needs to consider where resources are best deployed. This will require setting priorities and collating improved management information to direct effort in the most effective way.

3.44
The Collections Unit has recognised the need to redistribute activity between the Contact Centre and the District Collections Units. We support this approach. However, a next step is to consider strategic guidance to support the District Collections Units. One option would be to expand the Centralised Processing Unit, which has, in the past, assisted with the electronic fines management tasks. Redistributing activities, and reviewing task allocation, could enable staff in the District Collections Units to undertake more enforcement. This, in turn, would help to ensure that warrants and other forms of enforcement are executed in a timely manner.

Recommendation 2
We recommend that the Collections Unit consider how it can most effectively resource the District Collections Units, or redistribute administration work from the regions, to target enforcement to best effect – this will require enhanced management information and clear priorities.

Finding offenders using electronic data matching

3.45
Finding offenders is critical to collecting fines. The Collections Unit may struggle in its attempts to find offenders, usually because:

the offender has moved residence, or gone overseas;
information provided by the issuing authority is incorrect; or
the issuing authority does not provide enough information for the Collections Unit to identify and find the offender.

3.46
The database that stores the profiles of offenders who have not been found after efforts to make contact by telephone or mail is called the trace pool. When contact details are not available, the Trace Management System periodically tries to match the details that are available in the trace pool with information from a third party. Attempting to find offenders by exchanging information with third-party databases is a vital part of the Collections Unit’s business.

3.47
Electronic data matching with the Ministry of Social Development started in early 1999, and with the Inland Revenue Department in May 2002. Inland Revenue Department data matches are carried out 12 times a year, with up to 40,000 profiles in each batch of data. The Collections Unit matches data with the Ministry of Social Development 6 times a year. In 2004, on average 40% of the Inland Revenue Department data matches, and 11% of the Ministry of Social Development matches, were successful.

3.48
The Collections Unit is also able, in certain circumstances, to request information from the Ministry of Social Development or the Inland Revenue Department about an offender’s social security benefit or employer details. The information is used to determine whether an attachment order should be made. The Collections Unit must have a genuine and reasonable belief that the offender is working or receiving a benefit. This belief must be based on data less than 6 months old, which means that older information cannot always be used for this purpose.

3.49
The Collections Unit provided us with analysis that showed its data-matching efforts had contributed positively to the collection of fines. However, despite the Collections Unit’s concerted efforts to trace offenders through data-matching programs, publicly available databases and field work, about 265,000 profiles were in the trace pool at the end of March 2004. Of these, 67% had already been sent to all the data-matching agencies used by the Collections Unit. About 90% of those recycled profiles had been to the data-matching agencies at least 3 times.

Effectiveness of the system managing the trace pool

3.50
Given the possibility that updated contact information may have become available,¹³ we expected the Collections Unit to repeatedly try to contact offenders with older fines.

3.51
We were concerned that some fines profiles could, in theory, sit inactive without any periodic attempts to locate the offender. Unless profiles are systematically recycled through the Trace Management System for possible matches, the Collections Unit may lose the opportunity to contact offenders when new information becomes available.

3.52
We asked the Collections Unit to do some testing for us to provide assurance that profiles were systematically “popping up” from inside the trace pool. Seventy profiles were tested. Of these, 58 were properly recycled though the system. However, 12 profiles did not behave as expected.

3.53
For various reasons, 4 profiles should not have been in the trace pool – apart from removing them, no further action was required. The problems found with 7 of the profiles will, according to the Collections Unit, be resolved when the Trace Management System is replaced. The Collections Unit is investigating why the last profile had “hung” within the system.

3.54
This exercise showed that it was possible for some profiles to remain inactive, preventing the Collections Unit from making periodic attempts to find offenders.

Opportunities to enhance data matching

3.55
The Collections Unit has recognised the importance of exploring opportunities for additional electronic data matching. Pilot projects undertaken or under way include a trial with the Department of Internal Affairs for records of deaths, with the Accident Compensation Corporation, and with New Zealand Post Limited.

3.56
When the Collections Unit replaces the Trace Management System, it will be able to record the steps taken to find individuals and organisations it does not have valid details for. The enhanced system will be more flexible and allow further data-matching partners to be easily added.

Recommendation 3
We recommend that the Collections Unit implement the scheduled replacement of the Trace Management System.

Recommendation 4
We recommend that the Collections Unit carry out regular testing of the Trace Management System to ensure that profiles are not overlooked and that overdue fines are systematically put forward for data-matching purposes.

Finding offenders manually – the Centralised Processing Unit

3.57
When electronic methods have not found offenders, batches of profiles are passed to the Centralised Processing Unit. Staff in the Centralised Processing Unit use manual methods to find contact details for offenders.

3.58
The Centralised Processing Unit began with a trial, initially dealing with creditor address requests and attempts to locate victims. It began to focus on finding fines offenders in late April, 2004.

3.59
The Centralised Processing Unit uses several investigative techniques and a variety of information sources to find telephone numbers, dates of birth, address details, or other contact information that might enable the Contact Centre or District Collections Units to contact an offender.

3.60
This manual tracing improves the quality of data about offenders contained in COLLECT. It enables the Collections Unit to contact offenders and helps clear older debt when contact details become available (for example, when an offender’s circumstances change).

3.61
At the time of our audit, the Centralised Processing Unit was in the process of establishing standard work procedures and performance measures for its manual tracing work.

3.62
Results to date suggest that the Centralised Processing Unit is effectively producing contact information for use by the Contact Centre and District Collections Units. Over 10,000 profiles were dealt with over a period of 2-3 weeks during June and July 2004, with almost 6,000 successful matches. Over April and May 2004, the Centralised Processing Unit found contact details for 58% of the offenders.

3.63
The Centralised Processing Unit also periodically provides valuable assistance to District Collections Units with large numbers of fines scheduled for enforcement, significantly reducing numbers of older profiles.

3.64
A business case to increase the Centralised Processing Unit to 50 staff will support the establishment of a team dedicated to manual tracing. Expanding the Centralised Processing Unit should help the Collections Unit deal with the pool of untraceable profiles.

Enforcement

3.65
We examined the policies and processes that guide the Collections Unit’s staff in undertaking enforcement. We found that policies:

set out the circumstances when enforcement may occur;
set out the enforcement options;
outline legislative requirements relating to enforcement;
explain how enforcement is to be recorded in COLLECT; and
describe the procedure to escalate fines to District Collections Units for enforcement.

3.66
We expected to find that the Collections Unit’s staff would have exhausted all options for early compliance within the first 28 days, before considering enforcement.

3.67
A Deputy Registrar at the Contact Centre or in the District Collections Units is able to issue an attachment order. However, a recommendation for any other enforcement must be accompanied by evidence that other options have been exhausted, and the decision to take additional enforcement measures is subject to the approval of a Team Leader. This, and the managerial approval of procedures (which is an administrative function), ensures appropriate oversight over the use of enforcement powers.

3.68
Escalating the collection of a fine, from securing voluntary payment by an offender to enforcement, happens in stages and is subject to robust controls. For example, an escalation spreadsheet provides a co-ordinated method for referring profiles for enforcement to the District Collections Units from the Contact Centre, providing information in a form designed to help District Collections Unit staff decide on appropriate enforcement options. In addition, the District Collections Units administer overdue fines through the computer systems and decide upon the most appropriate enforcement action.

3.69
As noted earlier, the policies and procedures used by Contact Centre staff to obtain payment emphasised the importance of making early contact with an offender, and of voluntary compliance. By examining profiles in COLLECT, we also assessed whether reasonable steps had been taken to contact offenders and recover payment before enforcement was considered.

3.70
The cases we examined showed repeated attempts to contact offenders, and recorded a variety of correspondence to remind offenders of their payment obligations and warn of impending enforcement.

3.71
From our discussions with Collections Officers in the Contact Centres and District Collections Units, we were satisfied that staff were well aware and informed of their powers, and the procedures they were required to follow when undertaking enforcement.

Managing overdue fines

3.72
Managing overdue fines is an important aspect of the business of the Collections Unit. We analysed the components of overdue fines, and what was causing movements over time in the amount owed. We identified where and how those factors were being managed within the Collections Unit.

3.73
Overall, the Collections Unit actively focuses on collecting overdue fines by:

seeking to contact offenders, a large number of whom remain untraceable, through data matching with third parties and investing in tracing capability;
pursuing policy initiatives to improve the quality of personal information about offenders; and
actively initiating early contact with offenders to collect older and newer fines.

3.74
The Collections Unit collects information, including how long a fine has been overdue, whether the date of birth (if the offender is a person not a company) and a valid address have been recorded, and the region (based on the offender’s last known address).

3.75
There has been a steady rise in collection rates since the introduction of:

the COLLECT system;
the second Contact Centre site;
the Centralised Processing Unit’s manual attempts to find offenders; and
high-profile publicity campaigns.

3.76
However, despite the rising collection rates, the amount owed in overdue fines has continued to grow. No single strategy is likely to check this growth. The Collections Unit has recognised that a mix of strategies is needed. It is continuing to focus on new fines, carrying out more data matching with third parties, seeking better information about offenders from issuing authorities, and promoting a more co-ordinated approach to collecting and enforcing fines by all organisations involved.

3.77
In response to the rising numbers of fines, in 2004 the Ministry of Justice received funding for additional resources, including more staff in the Contact Centre, Centralised Processing Unit, National Office, and in the District Collections Units.

Our conclusions

3.78
Overall, the Collections Unit met our expectations. However, the number of fines entering the Collections Unit continues to rise, and the amount owed in fines has continued to grow. About 56% of the total amount owed is overdue, and, because of the rising numbers of fines it is responsible for collecting, the Collections Unit has been unable to make any substantial progress with this.

3.79
Because of the steady increase in infringement fines entering the Collections Unit, it has needed to review its structure and allocation of resources. Concerns about resourcing levels in the Collections Unit led to an increase in funding in 2004, enabling 63 new staff to be appointed to the Contact Centre and Centralised Processing Unit.¹⁴

3.80
District Collections Units are responsible for a variety of competing activities (unlike the Contact Centre, where fines can be pursued when they first enter the Centre and resources are dedicated to this task). The structures, roles and varied responsibilities of District Collections Units make a concentrated focus on fines collection more difficult and affect their ability to collect overdue fines.

13: If an offender receives another fine, their profile will be re-activated and updated for the new fine. This lets the Collections Unit pursue new and old fines together.

14: Funding was also provided to appoint 30 additional field staff to ensure compliance with the new health and safety legislation, and for support staff in the National Office.