The Credit Hire Organisation (CHO), which represents the UK’s credit hire industry, has urged the Competition and Markets Authority (CMA) to use the existing credit hire claims settlement framework when it issues its latest report.
Martin Andrews, CHO director general, said the General Terms of Agreement (GTA), an existing voluntary protocol used by most insurers and credit hire companies (CHCs) to manage replacement vehicle motor claims over the last 12 years, represented the best outcome for consumers, insurers and credit hire companies. He said: “The CMA have voiced no concerns over the operation of the GTA, which is widely acknowledged to be an effective protocol for the settlement of credit hire claims, offering material cost savings to insurers and removing additional frictional costs associated with litigated claims.”
“We would be happy to see the CMA make proposals to further develop the existing protocol and to make it binding on both insurers and CHCs,” he added.
“The CMA cannot recommend changes which would reduce or worsen a consumer’s basic and existing legal entitlement. It should also not implement a remedy that will increase costs for those consumers. On that basis it seems incredulous to ignore something that already works, in favour of other remedies which have unknown consequences and which would push up insurance premiums or leave customers stranded, the exact opposite of what the CMA intends.”
Mr Andrews explained that in the CMA’s list of possible remedies report, published in December last year, potential remedy 1c, which focuses on the GTA, was a good start point for further negotiation between the various parties. “We are happy to sit down with the CMA and the insurance industry to hammer out a detailed regulatory plan for the GTA that protects customers who need mobility after an accident, and which already ensures the costs incurred for hiring a similar replacement vehicle are more reasonable than if they hired a car on the open market.”
“What we want to avoid is a situation where non-fault customers are denied their basic legal rights and denied access to a replacement vehicle while their vehicle is being repaired. For families needing to get their kids to school, or people who need a car for their work, the economic consequences could be serious.”
Mr Andrews said that the CMA has yet to find any compelling evidence of an adverse effect on competition. “By their own calculations, the CMA have costed credit hire at an extra £2.69 per policy, yet customers would have to pay at least £30 if credit hire was not available and they had to buy a mobility policy from their insurer instead.”
He said: “The Government has made it a point of policy to reduce red tape, so we urge the CMA to act in proportion and focus on existing solutions rather than throw the baby out with the bath water.”