Fleet News

Credit hire firms reveal cash boost plan

TWO major credit hire companies have announced plans to raise extra funds in a bid to draw a line over a payment crisis that threatened to wipe out many industry players last year. Extraordinary general meetings at Helphire and Auto Indemnity have been held to hammer out plans to bring in more cash through share placings.

Helphire's board is aiming to raise £17.6 million by issuing 26 million shares at 75 pence per share. Auto Indemnity has placed 26 million new shares at 10 pence each to raise about £2.48 million after expenses to help meet increased demand for credit hire from customers.

The credit hire industry operates by providing replacement vehicles to the victims of non-fault road accidents and then reclaiming the cost back from the at-fault driver's insurer. But the industry was thrown into crisis when insurers refused to pay millions of pounds worth of bills, amid a legal battle that threw a question mark over contracts written by credit hire firms, with customers and arguments that credit hire firms were overcharging.

A Lords of Appeal ruling aimed to settle the issue, by stating the methods under which credit hire firms should operate, effectively ending premium pricing, and many firms have signed up to an Association of British Insurers scheme to agree fair rental rates for vehicles, in an effort to guarantee payment of bills.

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