The OFT has seen sense when it comes to credit hire

The motor credit hire industry first emerged in the late 1980s and was subject to increasing levels of litigation throughout the 1990s. Since then, the UK insurance industry has had the best part of a decade to heed the warnings about the sector.

The Office of Fair Trading first intervened between 2002 and 2004, to no avail. The recent increase in litigation and costs attributable to motor credit hire has forced the organisation to step in again. Shortly before Christmas, a further OFT enquiry into the practices of the credit hire sector was announced.

But it could have been much worse. The sale of legal expense insurance with little insurer choice given at the point of sale and high commissions indicate similar practises to the pensions and PPI mis-selling, which resulted in litigation against the industry.

Yet on this occasion the OFT has seen sense and merely made a referral back to the FSA to work with the industry for better disclosure.

Ian Clark is a corporate finance partner at Deloitte LLP

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