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‘A sigh of relief’ for the industry as MoJ plans no further action on credit hire and rehabilitation

Mar 25, 2022 | Other

Link(s):https://www.gov.uk/government/consultations/reforming-the-soft-tissue-injury-whiplash-claims-process#full-publication-update-history

Context

The Ministry of Justice has confirmed it will take no further action on credit hire and rehabilitation after publishing its response to part two of the whiplash reforms, which focused on credit hire, early notification of claims, rehabilitation, recoverability of disbursements, and which introduced a Baréme type system claims.

Key points to note

The Consultation asked the question “Which model for reform in the way credit hire agreements are dealt with in the future do you support? Out of the options given the majority of respondents supported the “Industry Code of Conduct Model”:

  • The Industry Code of Conduct Model was supported by 183 respondents with 98 positive responses. Those in favour of this option stated that the existing General Terms of Agreement (GTA) were both effective and appropriate, and that this option would continue to provide choice for not-at-fault claimants. It was argued that any other option had the potential to harm the market and be less cost effective.
  • Additional suggestions included either strengthening the GTA or making it mandatory, with one respondent suggesting that a MedCo-style approach could work. It was also suggested that the GTA should include industry-wide fixed rates and that there should be provision for (at fault) insurers to provide their own replacement vehicle. Moreover, it was proposed that any code of conduct should include a duty to be honest and impartial, and that greater clarity should be provided to consumers regarding credit hire and the terms of the agreement they are asked to sign.
  • Finally, it was put forward that credit hire organisations should be regulated by the FCA.

Next actions

Since the Government consulted on this topic work has continued within the industry on reinforcing and revising the voluntary GTA. As well as the GTA many of those operating in the sector have also developed specific streamlined agreements to enable the credit hire process to work effectively for claimants. The Government is therefore of the view that the best approach would be to continue to work with the key stakeholders in this sector to monitor and improve the use of industry agreements, including the GTA. Further consideration will also be given to whether it would be beneficial to make the use of such agreements’ mandatory in the future.