Legal expenses provider DAS has predicted that more credit hire firms will go bankrupt as landmark case Dimond v Lovell heads to the House of Lords for appeal.
DAS managing director Paul Asplin said: "It is likely that all credit hire cases will now be stayed by the courts pending the appeal judgment. It will of course be some time before a decision is reached. This will further damage the financial resources of credit hire companies and could lead to more insolvencies.
"When the House of Lords granted leave to appeal the decision it also allowed insurers to make a cross application regarding inflated car hire rates. If the issue goes against the hire companies, it will further undermine the bases on which they have been able to flourish."
The Dimond judgment established that most credit hire agreements should fall within the Consumer Credit Act. But since then, Asplin claims, many hire companies have side-stepped the issue by re-writing agreements.
"Whilst hire companies interpreted the judgment as legitimising their existence, they have proved beyond doubt that their activities are far from respectable. Why else have they avoided giving motorist customers the protection afforded by the Consumer Credit Act?"