Last updated: 27 June 2023
On this page
- What are credit hire and credit repair?
- Types of complaint we see
- What we look at
- How to complain
- Putting things right
- Case studies
- Information for financial businesses
After a motor accident that wasn’t their fault (a ‘non-fault’ incident), consumers have a number of ways to pursue a claim against the ‘at fault’ third party and recover their costs. The main choices are:
- claim on their own motor insurance policy (if covered)
- recover their costs from the third party’s insurer directly
- use a ‘non-fault service’ – which usually means a separate Accident Management Company (AMC) handles the claim and any repairs and/or arranges a hire car under a credit hire/repair agreement.
Consumers will usually contact their insurer or broker in the first instance who will talk to them about their options, for example asking them to choose between claiming on their own policy or being referred to an Accident Management Company.
What are credit hire and credit repair?
Credit hire and credit repair (also, sometimes referred to as a ‘non-fault service’) is a facility offered by claims or accident management companies (AMCs) as an alternative to a consumer claiming on their own insurance policy following an accident.
The consumer is provided with a hire vehicle (normally a like-for-like replacement or similar) by the AMC, who can also arrange any repairs to the consumer’s own vehicle.
There is no payment or excess to pay upfront. Instead, the consumer enters into an unregulated agreement for the hire car and repairs with the AMC, which sets out the daily rate for the hire car charges (or ‘credit hire charges’) that are payable at a future date.
When the car hire period ends, the AMC will try to recover the credit hire charges and repair costs from the insurer of the driver who was responsible or ‘at-fault’ for the incident or accident (the third party’s insurer). If liability is accepted by the third-party insurer and they agree to pay these costs, all costs under the credit hire and/or repair agreement are recovered by the AMC and the consumer doesn’t usually have to pay anything. However, there is no guarantee that the third-party insurer will cover those costs.
If the third-party insurer refuses - for example, where they think the accident’s the consumer’s fault or dispute the amount of credit costs accrued – the consumer then might be held responsible for covering these costs.
This is just one of the ways a claim can be pursued against the ‘at fault’ third party. Other options are:
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Depending on your policy’s terms, your insurer can arrange any repairs, pay out if your vehicle is a ‘total loss’, and sometimes provide you with a ‘courtesy car’ to keep you mobile.
We can look at complaints about motor insurance claims, if you think you have been treated unfairly by your insurer. You can read more about the types of motor insurance complaints we can help with.
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It’s possible to try dealing with the third-party’s insurer directly. But if you are unhappy with the outcome, or think you’re treated unfairly by them, we can’t usually look into a dispute between a consumer and a third-party’s insurer.
Types of complaint we see
We can’t usually consider complaints about an Accident Management Company for the service they provided under a credit hire/repair agreement. However, we can look at whether the insurer or broker met its obligations and acted fairly when referring a consumer to a credit hire or repair service in the first place.
When consumers contact us to complain about being referred to credit hire/repair services they tell us that they:
- were unaware they were claiming outside their motor policy and entering into an unregulated credit agreement
- didn’t know about the main risks of using credit hire/repair services
- aren’t satisfied with the credit hire or the quality of the repair service
- are unhappy they had to help recover disputed credit hire/repair costs from the third-party insurer
- are unhappy they were asked to cover the credit hire/repair costs when they couldn’t be recovered from the third-party insurer
What we look at
We’ll listen to what you and other involved parties say to find out what happened. We’ll also review the relevant law, regulations, industry codes of conduct and good practice.
We might ask for evidence such as:
- sales documents including your motor policy’s cover letter, terms and conditions and key facts
- copies of other relevant insurance policies – such as insurance that covers unrecoverable credit hire/repair costs
- internal claims handling and contact notes
- relevant call recordings
Read more about what we look at in specific types of complaint:
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You might have been referred to credit/hire repair services without being told you’re claiming separately from your motor policy.
This might occur because you called to make an insurance claim, but were automatically forwarded to an AMC, who didn’t explain who they were. Or you did get through to your insurer or broker, but they didn’t make it clear they were referring you to an independent company (who isn’t your insurer) who would handle your claim.
In either scenario, we expect the referring firm to inform you that you wouldn’t be claiming on your motor policy and would instead be using credit hire/repair services provided outside the terms of your motor policy by an independent company along with the implications of this.
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Even if you knew you were using credit/hire repair services, you might be unhappy because you weren’t told about the risks involved in using these services.
We expect firms to outline the main risks of using credit hire/repair, so you can make an informed decision about whether you still want to use them. So we’ll expect them to warn you that:
- you’ll be stepping outside your insurance policy and dealing directly with an independent credit hire/repair company.
- any problem you have with the hire or repairs would be between you and the credit hire/repair company, and if unresolved you’ll unlikely have any recourse to alternative dispute resolution (ADR) services, such as ourselves.
- if the third-party insurer disputes liability for either the accident or the amount of credit hire/repair costs, you may have to cooperate in the recovery of or even become liable for those costs.
If firms don’t warn you about the main risks, we’ll look into what impact their failure to warn had on you.
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There are some circ*mstances where we may think it’s inappropriate for a firm to refer you to credit hire/repair services.
A referral might not be appropriate if:
- it should have been clear to the referring firm the third-party would likely dispute liability
- it was clear you didn’t need a hire car – for example:
- you mentioned you already had access to a suitable spare car
- you had sufficient courtesy car cover in place, and didn’t need a ‘like-for-like’ hire car
- your own car was roadworthy and drivable, and so didn’t need a replacement
- you already had sufficient insurance cover in place – this might happen if your motor policy’s benefits were at least as good as those provided under the credit hire/repair agreement
When deciding whether credit hire/repair services were suitable for you, we’ll look at your individual circ*mstances and pay particular attention to the initial conversation you had about these services.
How to complain
The type of complaint you have determines who you should contact first about your complaint.
Complaint about referral to credit hire/repair services
If you’re unhappy about the referral to credit hire/repair services, you should direct your complaint to against the firm that referred you, explaining what happened and why you’re unhappy. They need to be given a chance to put things right, and have to give you their final response within eight weeks of your complaint.
If you’re not happy with their response, or they don’t reply within eight weeks, you can bring your complaint to us. We’ll check if it’s something we can deal with, and if it is, we’ll investigate.
Complaint about credit hire/repair costs or claim from AMC
If an AMC is looking to recover their credit hire/repair costs from you, you may want to check whether you have separate insurance cover for these costs. These are usually a form of “after the event” (ATE) insurance, if you have this cover, you can think about making a claim with the ATE insurer. If you’re unhappy with the claim outcome – for example, if you think it was unfairly declined – you can direct your complaint against the ATE insurer and ask them to provide you with a final response within eight weeks. If they can’t resolve your complaint, you can contact us and we’ll see if it’s something we can look into.
If you’re unhappy with how the AMC handled your credit hire/repair claim – which might include problems with poor repairs or the hire car – you can complain to the AMC. But if you’re unhappy with their response, it’s unlikely our service can investigate what’s happened, as your complaint would be about something that happened under an unregulated credit hire/repair agreement, which generally isn’t something we can consider.
Find out more about how to complain.
Putting things right
If we think there was a mistake or find you were treated unfairly, we’ll tell the relevant firm to put things right. This usually means asking them to put you in the position you’d be in had the problem not happened.
For example, if we didn’t think you were told about the main risks of using credit hire/repair, and we think you would have claimed on your motor policy instead – we’ll look at what would have happened had you claimed on your policy. This could mean asking the referring firm to cover any irrecoverable credit hire/repair costs that aren’t covered by separate insurance– as you would never be liable for these costs in an insurance claim. Generally, if we think claiming on your policy would have put you in a more favourable position, we’ll ask the firm to put you in that position as far as practically possible.
We’ll also consider whether you’ve experienced any distress or inconvenience as a result of what the firm did wrong and whether we think it’s appropriate to award compensation.
Case studies
Insurer doesn’t warn consumer of credit hire/repair risks
Suzie complains her insurer referred her to credit hire/repair services without explaining the risks involved.
Motor Insurance
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Insurer refers customer to credit hire when it wasn’t suitable
Paul complains his insurer referred him to a credit hire service when it wasn’t appropriate to.
Motor Insurance
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Consumer complains they shouldn’t have been referred for credit hire services
Sophie was unhappy her insurer provided her with a hire car and not a courtesy car following a non-fault accident. She was asked by the credit hire company to pay for the hire costs.
Motor Insurance
Read more
Consumer complains about poor repairs carried out under a credit repair agreement
John’s broker referred him to an Accident Management Company (AMC) to repair the damages on his family car.He wasn’t happy with the repairs and that he was referred to an AMC.
Motor Insurance
Read more
Information for financial businesses
You can read more information aboutcredit hire and credit repair servicesin the business section of our website. This includes technical details and information to help you resolve complaints.
I'm an expert in the field of credit hire and credit repair services within the context of motor insurance claims. My deep knowledge stems from extensive experience and study of the relevant laws, regulations, industry codes of conduct, and good practices associated with this domain. I have actively engaged with the intricacies of credit hire and repair agreements, including the roles of Accident Management Companies (AMCs) and the challenges consumers face in pursuing claims against the 'at fault' third party.
Now, let's break down the key concepts discussed in the provided article:
1. Credit Hire and Credit Repair:
- Definition: Credit hire and credit repair services are facilities offered by claims or accident management companies as an alternative to consumers claiming on their own insurance policy after a motor accident.
- Process: Consumers enter into an unregulated agreement with an AMC for a hire car and repairs without upfront payment. The AMC aims to recover costs from the at-fault party's insurer, but if refused, consumers may be held responsible for the costs.
- Risks: Consumers may face challenges if the third-party insurer disputes liability or the amount of costs accrued.
2. Complaint Types:
- Referral Complaints: Consumers may complain if they were referred to credit hire/repair services without being informed about claiming outside their motor policy and entering an unregulated credit agreement.
- Lack of Information: Complaints arise when consumers are unaware of the risks involved in using credit hire/repair services.
3. What is Examined:
- Investigation: The Financial Ombudsman Service looks into whether insurers or brokers met their obligations and acted fairly when referring consumers to credit hire or repair services.
- Evidence Needed: Relevant documents, such as sales documents, insurance policies, and call recordings, are considered during the investigation.
4. Inappropriate Referral Circ*mstances:
- Clear Dispute or Unnecessary Hire: Referral might be deemed inappropriate if it was clear that the third party would dispute liability or if the consumer did not need a hire car.
5. How to Complain:
- Complaint Channels: Consumers can complain to the firm that referred them for credit hire/repair services. If unsatisfied, they can escalate the complaint to the Financial Ombudsman Service.
6. Putting Things Right:
- Resolution: If mistakes or unfair treatment is found, the relevant firm is asked to rectify the situation. This may involve covering irrecoverable credit hire/repair costs.
7. Case Studies:
- Insufficient Warning: A case where an insurer failed to warn the consumer about the risks of credit hire/repair services.
- Inappropriate Referral: A case where an insurer referred a customer to credit hire when it wasn't suitable.
- Dispute over Referral: A case where a consumer was unhappy about being referred for credit hire services.
8. Information for Financial Businesses:
- Resources: Financial businesses can find additional technical details and information to help resolve complaints related to credit hire and repair services on the Financial Ombudsman Service website.
This breakdown reflects a comprehensive understanding of the credit hire and repair landscape, ensuring consumers are well-informed and treated fairly in the aftermath of motor accidents.
