Premium finance provider Prompt has dismissed reports that it is obliged to meet claims from Independent policyholders after the insurer's plunge into liquidation.
Prompt chief executive Bob Golden said it was incorrect to say, as some trading standards officers had done, that premium finance providers may be liable for claims against Independent under the Consumer Credit Act.
He stressed that Prompt's premium finance agreements are with client policyholders and not insurers, for example Independent.
As Prompt has no contractual relationship with Independent it cannot therefore be held liable for policyholders' claims.
However, Independent policyholders who have paid for their cover by instalments are still liable to pay the full year's premium to Prompt, even if they have to seek alternative cover.
Golden said: “The Consumer Credit Act is very clear, if you have a pre-existing relationship between a supplier of goods and services and a creditor, there is joint and several liability for any goods.”
