Fleet News

Daily Rental: Congestion charge takes its toll on rental firms and fleet customers

Congestion charging could be coming to a town near you as councils look at how to keep traffic flowing in busy areas. Local authorities are encouraged by the impact that the London congestion charge has had on traffic, but daily rental companies have a very different story to tell.

THE second anniversary of the London congestion charge is approaching – and two years down the line London mayor Ken Livingstone is rubbing his hands in glee.

Despite the controversy surrounding its introduction, the scheme has kept Livingstone’s promise of slashing congestion and pollution in the city by huge amounts.

Government sources say the congestion charge has reduced traffic in the centre of London by 50,000 vehicles a day, traffic speeds are increasing and everyone’s happy – but they’re not.

Daily rental companies could argue they offer a green alternative as customers use a car only when they need one, but many are victims, rather than victors, in the congestion charging war.

The problem is relatively simple. Under the congestion charging system, drivers pay £5 to enter the zone.

They must pay on that day, or face a hefty £50 penalty, which nearly doubles for late payers. But customers renting vehicles are continuing to enter the city in their droves without paying the charge, either through ignorance or neglect.

And that means thousands of Penalty Charge Notices (PCNs) are landing on the desks of rental companies with alarming regularity.

This equates to hundreds of thousands of pounds in fines sent out by Transport for London (TfL) and the rental companies have to process all of them every single month.

The industry is not alone. This month, the Fleet News FN50 review of the leasing industry revealed that nearly 200 drivers of leased cars were entering the capital every day without paying the charge, costing fleets more than £2 million a year.

Leasing company managing directors blame drivers for thinking that the leasing company pays the charge automatically as part of the benefit of driving a leased car.

Fast-track penalty system a ‘nightmare’ for rental companies
THE administrative burden of dealing with congestion charge fines is the heart of the problem. Fines are sent to the owner of the vehicle. So if a driver rents a vehicle and doesn’t pay the charge, the rental company gets the bill.

Neil Cunningham, Hertz UK’s general manager, said: ‘The congestion charge is still a nightmare in terms of administration.

‘We are still getting 3,000 Penalty Charge Notices (PCNs) a month for customers who have not paid the congestion charge.’

‘The number of congestion charge fines National Car Rental receives is increasing year on year. The number of fines received in August 2004 is 64% up on August 2003.’

Brian Jayes, vice-president of UK operations at National Car Rental, said: ‘PCNs comprise parking fines, congestion charge fines, bus lane and speeding fines. In the first four months of 2004, National received a total of 19,100 PCNs for customers driving the company’s rental vehicles.

‘Yet in 2003, the total number of fines received for the entire year was only 54,000. These comprised 15,000 parking fines, 15,000 fines for speeding offences, 22,000 congestion charge fines and 2,000 bus lane fines.’

Thrifty Car Rental has even had to change the way fines are administered to cope with the increased numbers and the speed they are coming from TfL.

Robert Burton, managing director, said: ‘We do not normally have problems with customers paying the fines; the problem lies in the extremely quick escalation of the fines process. Rental companies could be left with some costs if they have not paid the fine or not referred it to the customer quickly enough.’

Under the current system, the owner of the vehicle is responsible for handling the fine.

As the owner, the rental company must therefore settle the debt, then chase the customer for payment, often adding an administration charge, incurring cost and inconvenience all the way through the chain, from supplier to fleet customer.

Some companies include the congestion charge for the first day of rental in the rental charge, for cars hired within the zone. But any further charges are then the customers’ responsibility and often drivers just don’t listen.

Many rental companies believe a new payment system should be introduced to reduce the administration and time it currently takes to process and deal with fines.

Jayes said: ‘National and the industry as a whole feels that the biggest potential win would be the introduction of more sophisticated technology by the Mayor to help improve the way the charge and fines can be paid.’

This is a view shared by other daily rental groups including Hertz and Thrifty. Cunningham said: ‘We would like to pay the fines but TfL has not made it easy. If TfL could give us a list of all our cars which passed into the zone we could transfer all the money the next day.

‘Currently, for every car that enters the zone we get an individual fine. TfL needs to introduce an electronic file which is sent out at midnight every day. This would mean we could pay all the fines in one go and reduce the administrative burden.’

The main impact of the congestion charge has been the way daily rental companies have had to recharge fines to the customers and the administrative nightmare that it this has created.

However, Thrifty also blames the inadequacies of TfL for making the problem even worse.

Burton said: ‘It remains a major frustration that liability cannot successfully be transferred to the driver of the car. The onus therefore, for settling the fine remains with the rental company, in our case Thrifty Car Rental, as the registered keeper – who then has to seek to recoup the expense from the culprit. At current levels, this represents some £19,000 a month.’

Many rental companies have even taken on extra staff to cope with the administrative burden the congestion charge has produced.

National Car Rental now has a team dedicated to deal with all PCNs, including congestion charges, Enterprise Rent-A-Car has one employee who spends 20 hours per week administering congestion charging penalties and Hertz has had to recruit additional staff to deal with penalties.

Don Moore, vice-president of sales at Enterprise, said: ‘We have created an entire Traffic Violations Department due to the increased work load, as in the South East England Group alone we have already seen more than 11,000 violations so far this calendar year.’

How the congestion charge operates
CONGESTION charging encourages the use of other modes of transport and is also intended to ensure that, for those who have to use the roads, journey times are quicker and more reliable, according to Transport for London, which administers the scheme.

The London scheme requires drivers to pay £5 per day if they wish to continue driving in central London during the scheme’s hours of operation. Drivers can pay in a number of ways, including via text, phone, or on the web.

Details of the vehicle’s registration number are entered, which are then stored on computer. Camera systems then read every numberplate entering the city, match them up to paid vehicles and use the Driver Vehicle and Licensing Agency (DVLA) database to send fines to those that have not paid.

According to Ken Livingstone, the charge is essential to keep London moving. Among reasons cited are:

  • It suffers the worst traffic congestion in the UK and is among the worst in Europe
  • Drivers in central London spend 50% of their time in queues
  • Every weekday morning, the equivalent of 25 busy motorway lanes of traffic tries to enter central London
  • It has been estimated that London loses between £2 million and £4 million every week in terms of lost time caused by congestion. By law, all money raised from congestion charging will be added to funding for London’s transport facilities – so that it benefits everyone, Transport for London says.

    ‘Our cars should be exempt‘
    ALL of the major rental companies take steps to make customers aware of the charge.

    Leaflets are left in vehicles, posters adorn collection points and customers are asked to sign a disclaimer stating they are liable for the fine. But still the message fails to get through.

    Des McCann, director of UK operations at Budget Rent-a-Car, said: ‘To highlight the issue to our customers, all rental agreements are over-stamped with an acceptance box for the renter to sign as acknowledgement of responsibility for the congestion charge and the fee we levy to cover administration costs. This also applies to parking, speeding and bus lane fines.

    ‘If a customer requires a vehicle to be delivered into the zone, they are reminded that they need to make a congestion charge payment by midnight. Likewise, if we are required to collect a vehicle from within the zone, renters are reminded that they are responsible for the congestion charge on the day.’

    One solution to the problem would be to make all rental cars in the charging zone exempt from the penalty. Rental groups have called for the British Vehicle Rental and Leasing Association (BVRLA) to lobby the Government for exemption.

    Thrifty’s Burton said: ‘Vehicle renting is the ultimate car-sharing scheme, with many people using the same vehicle in a month, reducing ownership and congestion.’

    Bigger zone upset
    BEFORE other cities join the scheme, proposed plans to extend the congestion charge zone to Kensington and Chelsea are already under way for 2006.

    It is a decision which is already sending waves of discontent through the daily rental industry.

    Jayes said. ‘National welcomes the fact that 66% of respondents to a recent consultation paper were against the proposal. This has resulted in the Mayor agreeing to review the proposal once more.’

    McCann agreed. He said: ‘With the proposal to extend the central London congestion charging scheme and councils clamping down on traffic violations in general, it means an even greater impact than the rental industry was already feeling. It has had, and continues to have, a significant impact on our business.’

    One thing is certain however, if fleets allow their drivers to ignore the simple demands of congestion charging, then in the end they will pay many times over through penalties, administration charges and other extra costs.

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