Legal row with Autofocus blamed for payment delays
Accident Exchange announced that rental days for the first half were up by 2.6% to 585,000 (570,000) but higher margin prestige rental days were down 20% with lower margin mainstream rental days up 30%.
It said insurers were delaying payment because of its dispute with Autofocus over evidence used in court challenging Accident Exchange’s fees. The delays in cash collection will result in the Group reporting a loss for the six months to 31 October 2009, Accident Exchange said.
Autofocus staff have left
On Autofcocus the company said: “We have identified over 6,500 cases where Autofocus evidence appears to have been deployed and it is our current intention to make applications to the Courts to re-open cases where it is clear that reliance on the Autofocus evidence by the trial Judge produced an under recovery based on unsound evidence. The Board acknowledges this process will take some time to conclude.
“Nevertheless, the frequency of use and reliance on Autofocus data at trial by insurers is now diminishing and we understand that 13 of the 17 individuals against whom we have evidence of dishonesty have now left the employment of Autofocus.
“The positive effects of the Autofocus issue are emerging and, in particular, there has been an improvement over the past few weeks in the engagement of insurers and solicitors representing insurers regarding the settlement of claims without us having to progress claims to Court.
Fleet reduction
Accident Exchange’s fleet has shrunk to 4,658 at 31 October 2009 (30 April 2009: 4,865), cutting £21.3m in fleet finance debt to £54.2m at 31 October 2009 (30 April 2009: £75.5 million).
“We now intend to refocus the Group's activities on our higher margin prestige automotive and manufacturer referral partners, historically the mainstay of operations.
“Over the next few months we will therefore reduce the size of our mainstream fleet further, thereby commencing materially fewer lower margin mainstream hire starts and reducing the working capital requirements of the business.
“To align the cost base of the prestige focused business, and after a period of consultation with our staff, annualised reductions in fleet and employment related costs of around £24m are targeted to be attained by the end of the current financial year.
Autofocus were not available for comment this morning.
