Fleet News

ECO scheme creditworthiness checks introduced after changes to Consumer Credit Act

Employees will have to undergo a creditworthiness check in future if taking a car through an employee car ownership (ECO) scheme.

Strict new guidelines have been introduced to the Consumer Credit Act, which include an obligation on the lender to check an individual’s credit rating.

“We completed all relevant modifications to our existing scheme structures before Christmas, ensuring our current customer schemes and any prospective customer schemes are compliant with the revised legislation,” said Ian Hughes, commercial director at Zenith Provecta.

It’s estimated that more than 100,000 employees are provided with a car through an ECO scheme, although numbers have been in decline since a 2004/05 peak.

More recently, doubts have been raised over the future of ECO schemes amidst claims that the downward trend in business mileage was wiping out tax savings originally achieved by employers.

But providers are confident that this latest issue will not have a detrimental affect on their ability to continue to provide an ECO option.

“Where an employee fails a credit assessment, Zenith Provecta will work with the corporate client to ensure that a suitable solution is delivered,” said Huughes.

How that could be resolved would depend on the employee and the employer, and on the individual circumstances, but one possible option is the employer would act as guarantor, says Zenith Provecta.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee