Helphire chief executive Michael Symons, representing the embattled credit hire industry, has criticised the ABI's proposed guidelines for insurers that would encourage them to use only approved firms.
Symons argues that the “Approved Credit Hirer” scheme is based on hire tariffs that are too low to be commercially viable, and leaves legal loopholes that will result in a worse service for customers.
Insurance Times revealed last month how the ABI plans to advise insurers to direct motor accident victims to just two designated hire firms – Enterprise rent-a-car and National Car rental.
Although the guidelines would not be enforceable, they raise the possibility that an insurer or intermediary authorising the use of a different credit hire company would not be able to reclaim the full cost from the other party's insurance company.
Symons believes the firms are offering low fees in a bid to gain market share, not understanding “the level of costs which will be incurred in providing the service”.
A feature of the ABI scheme is that the agreed tariff would be reduced by 20% once an insurer admits liability for the accident, on the basis that payment will then reach the hirer within 28 days.
However, Symons argues there is no right to prompt payment, and agreement to pay hire charges does not necessarily follow from an admission of overall liability.
Meanwhile, the ABI is expected to announce next week that its scheme will be up and running from September 1.