The police force that wrote this letter is liable to be sued for damages for writing letters such as these. See the case precedents that enable a case to be brought, and potentially these precedents.
Quote the law and report the bailiff for fee fraud to the police.
In addition to your written complaint, you can also anonymously report the fraud to Action Fraud online. These are investigated by the Serious Fraud Office who can investigate organised complex frauds. Police follow a list of criteria for deciding whether to investigate a fraud. You must learn the criteria and set out your complaint so it fits neatly into it. Otherwise, police will summarily fob your complaint.