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OFT consults on conditional exemption proposal for ABI/credit hirer agreement

An agreement between motor insurers and replacement vehicle providers is beneficial to consumers and satisfies the conditions for exemption under competition law provided that certain conditions are met, believes the Offfice of Fair Trading.

The OFT proposes to grant an individual exemption to the Association of British Insurers' (ABI) General Terms of Agreement (GTA) under the Competition Act provided that certain changes are made to the wording and operation of the GTA.

The GTA acts as a protocol between motor insurance providers and credit hire organisations (who offer vehicles to innocent parties involved in accidents and subsequently claim the cost of hire back from the 'at-fault' driver's insurer). The agreement is aimed at avoiding previous high levels of dispute and litigation in the claim process. The agreement was notified to the OFT by the ABI and provides for collective approval of prices that insurers will pay to credit hire organisations (CHOs) as well as ensuring bills are paid promptly by insurers. - less litigation between insurers and CHOs - a better framework for transactions between insurers and CHOs - greater certainty and security for consumers who use credit hire vehicles - restraint on credit hire rates and indirectly on the cost of insurance premiums. Provided these changes are made the OFT proposes to grant an individual exemption to the agreement as it will deliver benefits in a way that least restricts competition. The OFT is consulting on the proposal before a final decision is made. The consultation document can be downloaded from ww.oft.gov.uk

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