Lenders must familiarise themselves with details of
Crushwatch Scheme, says John Perez.
The Vehicle Recovery Protocol, commonly referred to as the HPI
Crushwatch Scheme, was set up as a joint initiative between the
Finance & Leasing Association, HPI and the Association of Chief
Police Officers (ACPO) in England. A similar scheme is in operation
in Scotland.
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The purpose of the scheme is to
establish a recovery protocol for motor finance companies to
recover vehicles subject to outstanding finance, which have been
seized by the police for being driven without valid insurance. The
police have statutory powers to seize uninsured vehicles under
section 165A of the Road Traffic Act 1988.
The schemes overriding benefit to
lenders is the ability to take positive action in protecting an
uninsured asset. Upon seizing a vehicle the police will immediately
carry out a vehicle provenance check with either HPI or
Experian.
If the vehicle is found to be
subject to a secured finance agreement, then, as the legal owner of
the vehicle, the lender 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 within a specified period of time. If
proof of insurance is not provided within the period specified,
usually seven days, the police can decide whether to crush the
vehicle.
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By GlobalDataThe vehicle will be released by the
police provided proof of insurance is demonstrated and the recovery
and storage charges are 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. Vehicle seizures will either automatically bring the
agreement to an end, or it will constitute a breach of the
agreement.
Those agreements that are regulated
will require the lender to serve a statutory notice. Special
attention must be given to the form and content of the notice.
Seeking specialist advice is recommended as the financial
consequences of getting this wrong could be far reaching on the
lender.
There is no doubt that the scheme
brings significant benefits to motor finance lenders, while
ensuring uninsured vehicles are rightfully removed from public
highways.
Lenders should, however, take time
to ensure they have appropriate policies and strategies in place
enabling them to recover and protect their asset while
simultaneously ensuring statutory compliance in enforcing their
contractual rights.
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,
where otherwise they may have been at serious risk of being
destroyed.
John Perez is a partner and
head of finance litigation at Chafes Solicitors
