The Vehicle Recovery Protocol, commonly referred to as the HPI Crushwatch Scheme, was set up as a joint initiative between the Finance & Leasing Association (FLA), HPI and the Association of Chief Police Officers (ACPO) in England. A similar scheme is in operation in Scotland. The purpose of the scheme is to establish a recovery protocol for car finance lenders to recover vehicles subject to outstanding finance, which have been seized by the police for being driven without valid insurance. Since October 2012 the scope of the scheme was extended to include vehicles seized for being driven without a valid tax disc. The police have statutory powers to seize these vehicles under Section 165A of the Road Traffic Act 1988.
The scheme’s overriding benefit to lenders is the ability to take positive and prompt action in protecting an uninsured asset. Upon seizing a vehicle the police will immediately carry out a vehicle provenance check with HPI. If vehicles are found to be subject to a secured finance agreement, then, as the legal owners of the vehicle, the lenders will be notified of the seizure. They will also be given details of where the vehicle is being stored. A seizure notice will allow either the registered keeper or owner of the vehicle an opportunity to provide proof of insurance and to satisfy the conditions as set out in the seizure notice within a specified period of time, normally seven days. If the conditions in the notice are not satisfied then the police can decide whether to crush the vehicle.
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The vehicle must be released by the police provided the conditions as set out in the seizure notice are met. In the instance of the vehicle being uninsured, proof of insurance will need to be shown and also the recovery and storage charges paid.
The police are bound by statute to release the vehicle to the registered keeper or owner, whoever attends first after having complied with the release conditions. If the vehicle is recovered by the lender they will need to provide the police with an indemnity against future claims which may arise from the release of the vehicle.
Lenders should pay special attention to the terms and conditions of their finance agreements, particularly those agreements regulated by the Consumer Credit Act 1974. The seizure of the vehicle will either automatically bring the agreement to an end, or it will constitute a breach of the agreement that will require the lender to serve the customer with a statutory default notice.
Special attention must be given to the form and content of the default notice. Seeking specialist advice is recommended as the financial consequences of getting this wrong could be significant on the lender.
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By GlobalDataThere is no doubt that the scheme brings significant benefits to motor finance lenders, while ensuring that uninsured vehicles are rightfully removed from public highways.
Since the scheme was launched in 2010, 44 of the UK’s 52 police forces have signed up to it, including the recent addition of
the Metropolitan Police in late 2012. The wider scope of the scheme is placing greater attention on lenders to assess closely the effectiveness of their procedures, in particular the use and content of statutory default notices. Lenders have been known in the past to serve a default notice for failing to insure which is described in the notice as an irremediable breach. The court will normally apply an objective assessment as to whether the breach is capable of being remedied or not.
A default notice could be deemed invalid and ineffective in circumstances where the breach was described as being irremediable when in fact it was later found to be a breach capable of being remedied by the customer.
The assessment as to whether a breach is capable of being remedied will to some extent depend on the terms of the agreement and the individual circumstances of the case.
It’s likely, in view of the increasing number of police forces signing up to the scheme and its extended scope, that the number of vehicles seized under this scheme will continue to increase. It is therefore essential motor finance lenders carefully consider their current procedures to ensure that they are as robust and compliant as possible.
Credit needs to be given to the FLA for developing the scheme and the work they have done jointly with HPI/Experian and ACPO. The scheme has already demonstrated significant success in assisting lenders reclaim seized vehicles which otherwise may have been at serious risk of being destroyed.
John Perez is a partner at DWF LLP
