A landmark legal ruling in the House of Lords intended to end damaging disputes between credit hire firms and insurers has instead added to the confusion and led to the two sides increasingly having to battle each other in the courts.
The Lords of Appeal ruled that many of the bills being disputed need not be paid, because their contracts fell foul of the Consumer Credit Act 1974, but were not enforceable. However, the Lords agreed the industry itself was valid, provided it charged 'spot rates' quoted by daily rental firms, but the reference was vague.
Helphire chairman Martin Kinney said: 'It appears to be the strategy of insurers to raise a number of defences to force credit hirers to issue proceedings and to pursue them well down the track before the insurers eventually settle. Following Dimond-v-Lovell, we regret the necessity to pursue these cases to court, particularly in the light of the Association of British Insurers' statement following the House of Lords ruling that 'reasonable credit hire claims would be paid.'
Helphire is negotiating with Lord Scott of Foscote, head of civil justice, to resolve the row between the two sides and ensure bills are paid. Until then, profits would drop, Kinney warned, despite the business remaining as profitable as it was last year.
Helphire, like many credit hire firms, is in discussion with the Association of British Insurers and said it could even join the association's scheme which sets out agreed credit hire rates insurers are prepared to pay. Already Europcar and National Car Rental are part of the scheme.
A spokesman for the Association of British Insurers said: 'Most insurance companies are content with the findings of the Lords of Appeal and I do not think they would be deliberately withholding payments, although we cannot comment on individual cases.'