It’s often regarded as one of the less glamourous sides of the motor trade business, but vehicle repossessions and bailiff work are necessary occupations even in times when the national economy is financially stable. The COVID virus and the subsequent economic fallout has once again put repossessions at centre stage, with finance and lease repayments faltering or even halted. But agents require suitable bailiff or repossession insurance protection if they are to conduct their business efficiently, legally and professionally.
In April this year the UK’s financial regulator gave car loan borrowers and users of other forms of high-cost credit the option of freezing payments and repossessions for three more months, amid worry about a mounting economic toll from the COVID pandemic. The rules mean car finance providers are banned from repossessing cars until 31 October.
The UK’s Financial Conduct Authority (FCA) said that pawnbroking, buy now-pay-later, car loan and rent-to-own customers were allowed to ask to freeze or reduce payments for a further three months if they had previously requested to defer or lower payments. The extension means that borrowers who have not yet asked for a payment freeze can also make a fresh application to do so by 31 October.
However, some car loans will continue to accumulate interest during a freeze, so the FCA advises those who can make repayments to do so. The payment freeze option was introduced because the regulator faced the prospect of mass defaults from borrowers unable to work or on reduced pay as part of the government’s job retention scheme. The government has asked the public to avoid using public transport, with the consequence that cars are one of the only options for many longer journeys.
Repossession: Fair and legal
The FCA supervises and regulates the conduct of more than 50,000 firms in the UK that provide financial products and services. For those taking part as agents in the repossession sector they need to understand the processes involved. Agents must be ideally be registered with the FCA and be familiar with data protection and Treating Customers Fairly (TCF) which requires a company and its representatives to pay due regard to the interests of its clients and treat them fairly.
A comprehensive insurance protection scheme is therefore imperative for those for undertaking repossessions, collections or bailiff work. A Repossession Agent insurance policy should provide insurance cover for the collection, delivery and storage of repossessed vehicles or end of lease collections. Your activities need not just be limited to reposition and recovery; you can include storage, premises cover (including stock, fixtures & fittings, tools and mobile equipment), movement of own and customers’ vehicles, sale of vehicles and much else besides.
Your recovery vehicle could be anything from a heavy recovery lorry, to a flatbed truck with ramps and winch, to a transit van and tow dolly. You’ll need an operator’s licence if you use a vehicle of more than 3,500kg gross vehicle weight (GVW) ¬- the maximum combined weight of vehicle and load ¬- for carrying any kind of goods or weight in connection with your recovery business. This is designed to ensure that operators maintain their vehicles to a specified minimum standard, operate within the constraints laid down by the relevant transport legislation, and abide by environmental rules and regulations.
Other options might include full premises cover, liabilities and own vehicles. You should also investigate cover for public and employers’ liability and for the premises from which you operate, including yards. Remember too that other occupations such as vehicle recovery and towing, clamping and goods in transit might be necessary, which is why it is important to disclose fully the work you do or intend to do as part of your agent day to day working practices.