Credit hire and accident management companies are “among the clearest targets” of draft laws giving regulators new powers to tackle unfair trading practices, the Insurance Council of Australia says.

ICA wants strong enforcement once the proposed Competition and Consumer Amendment (Unfair Trading Practices) Bill is passed.

“The last thing someone who has been in an accident needs is a dodgy operator misrepresenting who they are and pushing services they don’t need,” CEO Andrew Hall said.

“These laws address a genuine gap. The next step is making sure operators understand the new obligations and that enforcement follows for those who don’t.”

Credit hire and accident management companies provide replacement vehicles and repair services to no-fault drivers, recovering costs from the at-fault parties or their insurers.  

But consumers have reported being led to believe they were dealing with their own insurers, and being pursued for costs when recovery failed. Vehicles have been “held to ransom” until bills are paid.  

Treasury’s draft laws introduce a general prohibition on unfair trading practices. They are designed to capture conduct falling outside the Australian Consumer Law, including general prohibitions on misleading conduct and unconscionable conduct.  If passed, the reforms are to take effect in July next year.

ICA says the changes must be backed by enforcement to deliver meaningful change for consumers. In a letter to Treasury, Mr Hall says the draft is a positive step.

“We see value in the general prohibition capturing harmful practices used by entities peripheral to insurance supply chains.

“These operators include credit hire companies who intercept claims processes and charge excessive fees, misrepresent their affiliation with insurers, or encourage exaggerated claims.”

ICA says it will work with Treasury to ensure the final framework is consistent across financial services legislation and does not add unnecessarily to the insurance industry's $3.5 billion annual regulatory burden.  

See the ICA submission here and the draft legislation here.

From the latest Insurance News magazine: How 'zero progress' on insurance affordability is spurring some levels of government to radical action