The Future of Credit Hire in Scotland

While the legal landscape in respect of credit hire is largely settled and established in England and Wales, the same cannot be said for Scotland. Fraser McAndry and Emily Jeffery take a look at what differences insurers need to be aware of, and what changes are coming that will have an impact on the handling of Scottish credit hire claims.

The Scottish courts’ approach

Historically, Scottish credit hire defence arguments are similar to those in England but this is not always based on established case precedent. In fact, case precedent in Scotland is limited.  Whilst arguments relating to impecuniosity and Consumer Credit legislation are largely settled, the Scottish Judiciary is yet to tackle and decide upon other key issues such as Intervention.

BHR in Scotland

Traditionally, the most common approach in Scotland was for Sheriffs to consider the average of the rates provided but this is not always an exact science. The courts have tended to take an objective approach in each case.  There are a handful of written decisions where the average BHR is used (Clark v City of Edinburgh Council and Greenlees v Allianz), but this Judicial approach is inconsistent with established Court of Appeal decisions in England.  The authorities of Stevens and McBride are, potentially, persuasive to the Scottish Sheriffs and higher Court but they are not binding upon them – this can result in a differing and more expensive outcome for insurers. 

The need to be costs aware

The costs regime and litigation process in Scotland is, of course, considerably different from England and Wales. Accordingly, defence strategies should be tailored to reflect this cost regime.

Currently, costs follow success:

This is the current costs landscape but changes in this arena are imminent with the introduction of Qualified One Way Costs Shifting (QOCS) about to come into force.

Credit Hire fraud

With the differing costs regime, this provides ample opportunity for credit hire organisations to take advantage of increasing revenue. This means the identification of fraudulent activity is key, and with our pan-UK counter-fraud initiatives already in place, Keoghs is ideally placed to assist insurers with Scottish claims and identifying organisations moving into the Scottish market.

Strategic litigation to drive a uniform approach

With the differences in systems and legal precedent, there is a clear market for challenging credit hire in the right circumstances to ensure that a standard approach is taken regardless of jurisdiction. Therefore with Keoghs’ extensive market knowledge and range of credit hire services, we are well-placed to drive forward strategic litigation and provide clarification to our clients when required.