Credit hire and credit repair: non-fault claims
We hear from people who are unhappy their broker or insurer referred them to credit hire or repair services, typically after a non-fault accident.
People who contact us to make a complaint are usually unhappy because they do not think they were made aware they were using a separate service , or they were aware but didn’t know about, or understand, the key risks in using them, and something’s gone wrong.
Types of complaint we see
When consumers contact us to complain, 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
- are unhappy 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 asked to cover the credit hire/repair costs when they can’t be recovered from the third-party insurer
Handling a complaint like this
When you get a complaint from a customer about a referral to credit hire/repair services, you should reply to them within eight weeks.
If you don’t reply within the time limits for responding to a complaint, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and that you have reflected carefully on the circumstances.
If there are disagreements about the facts, we’ll make our decision about what probably happened using evidence provided by you, your customer and relevant third parties.
Read more about resolving complaints before we get involved.
Information we will ask for when we receive a complaint
If a complaint is referred to us, we will ask both parties to provide information they think is relevant to the complaint.
Before we begin our investigation, we will ask financial businesses to provide information about their side of the events. In all cases we need a copy of the final response letter and a clear outline of your current position on the complaint.
The typical information we would expect to see about this type of complaint specifically includes:
- sales documents including the motor policy’s cover letter, terms and conditions and key facts
- internal claims handling and contact notes
- the credit hire/repair company’s contact notes
- a call recording of the first notification of loss call, and any other relevant calls
- a copy of any available insurance policy taken out to cover the hire/repair costs if they can’t be recovered from the third party
We may ask for further information or documents, depending on the circumstances of the case.
If either party fails to provide information we ask for in the time specified, we may proceed to an initial assessment or final decision based on the information that we have.
Read more about how we handle complaints.
What we look at
We’ll review what information the customer was given to make them aware of the pros and cons of using credit hire/repair services. We’ll then decide whether the customer had enough information to make an informed choice, and if not whether the lack of information negatively impacted them.
Read more about our approach in some of the specific types of complaint we see:
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We expect you to check whether your customer needed a hire car during your initial conversation with them. So we’ll talk to the customer and listen to the initial call to establish what their needs were.
We might find your customer didn’t need a like-for-like car because:
- their car was drivable
- they had sufficient courtesy car cover in place
- they had access to a spare car
- other adequate options were available to them, or
- they didn’t need a car at the time
In these situations, we’ll say it was unsuitable to refer them for credit hire.
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We’ll review how you investigated the claim circumstances, and what the customer told you about how the incident happened.
If the claim circumstances show liability is disputed or unclear, we wouldn’t think it appropriate to refer the customer to credit hire/repair services given the adverse impact on customers following a liability dispute.
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You must act in the best interests of your customers. You must also give them enough information about how credit hire/repair services work, so they can make an informed decision about whether to accept the risks in using these services.
Simply asking customers to read the terms and conditions of the credit agreement isn’t enough to fulfil these obligations. We expect the risks of credit hire/repair services to be carefully outlined during the first notification of loss call and before a consumer is referred to a credit hire/repair service.
As a minimum, we’d expect you to explain to your customers:
- they’ll be stepping outside a regulated insurance contract and dealing directly with an independent credit hire/repair company.
- any dispute relating to the hire or repairs must be resolved directly with the credit hire/repair company, with unlikely recourse to alternative dispute resolution.
- that if they’re later deemed to be at fault or credit hire/repair costs are disputed - they may have to cooperate in the recovery of, or even become liable for, those costs.
- what suitable cover they already have in place – for example, they may already have adequate courtesy car cover or a legal expenses policy that covers uninsured losses that might mean a referral wasn’t suitable.
We also expect you to present a fair and balanced view of the choices available to your customers. So if you decide to tell your customers they won’t have to pay an excess when choosing credit hire/repair, you should also say any excess paid can usually be claimed back in the event of a non-fault claim.
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Some insurers or brokers use an accident management company or other third parties to discuss the suitability of credit hire/repair with their customers. The Financial Conduct Authority’s rules generally allow firms to outsource their duties, but firms still retain responsibility for achieving the regulatory outcomes required. So insurers and brokers should ensure their partners adhere to the same principles and requirements as the broker/insurer would have to, had they handled the call themselves.
Where customers aren’t sufficiently informed of the risks, we’ll hold the insurer or broker responsible for any impact caused by their agents’ failure to properly discuss the pros and cons of using these services.
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. The exact details of how we’ll ask you to put things right will depend on the nature of the complaint, and how the customer lost out. Our general approach is that the customer should be put in the position they would be in if the problem hadn’t happened.
For example, if we didn’t think you sufficiently explained the risks of using credit hire/repair to your customer, and it confused or upset them - we might tell you to pay your customer compensation for any distress or inconvenience caused.
Additionally, if we think a properly informed customer would have chosen a different course of action (such as claiming through their insurance policy), we may ask you to put them in the position they’d be in had they used their policy. This could mean asking you to cover any credit hire/repair costs the customer is liable for, as these costs wouldn’t arise from making an insurance claim.
We also don’t think a customer would likely have to cooperate in the recovery of credit hire/repair costs, including attending court, had they claimed through their insurance policy. So if we think the customer wouldn’t have used credit hire/repair services, we’ll ask you to compensate them for any distress and inconvenience they experienced relating to the recovery of these costs.
Find out more about how we award compensation.
Case studies
Insurer doesn’t warn consumer of credit hire/repair risks
Motor Insurance
Insurer refers customer to credit hire when it wasn’t suitable
Motor Insurance
Consumer complains they shouldn’t have been referred for credit hire services
Motor Insurance
Consumer complains about poor repairs carried out under a credit repair agreement
Motor Insurance
Business Support Hub
If you want to talk informally about a complaint you've received, you can speak to our Business Support Hub. They can give general information on how the Financial Ombudsman might look at a particular complaint. We also offer guidance on our rules and how we work.
Find out how to contact the Business Support Hub.
Information for consumers
If you’re a consumer looking for information on complaints about Credit hire and credit repair services, you can read more about this on our dedicated information page for consumers or to make a complaint, find out more about how to complain.
