The ruling puts in jeopardy the future of thousands of cars either owned by the hire companies or supplied on rental agreements from alternative sources. Credit hire firms provide assistance to third party victims of car accidents by offering them a replacement vehicle and then billing the at-fault driver's insurance company. Insurers, concerned at the high charges being imposed by some credit hire companies - prices of £100 a day are sometimes quoted - challenged the validity of many hire agreements, claiming they fell foul of the Consumer Credit Act 1974 and were unenforcable because of the way contracts had been written. The value of claims affected was estimated at £200 million.
Five Lords of Appeal considering the case of Dimond v Lovell dismissed an appeal from credit hire firm 1st Automotive that all bills were legitimate. However the Lords agreed that the credit hire industry itself was a legitimate business and provided a worthwhile service. Several of the judges said charges should match the 'spot rate' quoted by daily rental companies in a move which will severely restrict the profits of credit hirers.