Context
The FOS has warned that motorists who do not understand the risks of credit hire could face bills of tens of thousands of pounds.
Key points to note
- As an alternative to consumers claiming on their own car insurance, claims or accident management companies (CMCs / AMCs) can repair the car or help with a replacement vehicle under a credit agreement.
- However even if the other party is at fault, if the AMC cannot recover costs from the other driver’s insurer, under the terms of the credit agreement they can recoup the costs from the consumer. Those bills can be extremely high and totally unexpected – leaving the consumer thousands of pounds out of pocket. Complainants have told FOS that they would never knowingly have chosen credit hire had they known the risks of having to pay the costs involved themselves.
- Others believed they were still dealing with their own insurer, and it wasn’t made clear to them that they’d been passed to a credit hire provider in the first place.
- FOS has urged the industry to take an approach which is balanced, fair and transparent – putting consumers at the heart of their thinking.
Next actions
None – for information and awareness.