Competition and Markets Authority abandons proposal to cap prices in credit hire market

29/09/14

The Competition and Markets Authority (formerly Office of Fair Trading) has published its Final Report into the supply of private motor insurance in the UK.

The market investigation began in September 2012. In June 2014 the regulator published its Provisional Decision on Remedies in which it proposed to cap the price at which non-fault victims of a car accident could recover the cost of obtaining a replacement credit hire vehicle.

The proposed remedy would have had a profound impact on the operation of the credit hire industry and also on the rights of accident victims.

Somewhat unusually, at the end of the review, the regulator abandoned its proposed remedy. As the CMA itself accepted, in the Final Report, the proposed remedy could have been easily circumvented and would have introduced significant distortions into the market. A price cap would not have been an effective or proportionate solution to the problems identified. The CMA also accepted that it lacked the lawful authority to implement its proposed remedy.

The private motor insurance market investigation report is here.