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Credit hire/credit repair became a significant customer service in the late 1980s. Back in the 1980s or earlier, if you wanted to hire a car and recover the cost from a negligent driver’s insurer you had to pay for it up front, obtain a receipt and then spend weeks, if not months waiting to get your money back. Credit hire firms were established to enable innocent motorists involved in an accident to obtain a car on credit.

Firms supply the car hire to motorists on credit and pursue recovery, not only of the cost of the hire, but also other uninsured losses as well from the at-fault party and their insurers. This is usually provision of a replacement vehicle (credit hire) and arranging repairs (credit repair).

A special feature of the industry is that although the clients are individuals, the income is in effect obtained from insurance companies. Credit hire was designed to help motorists involved in accidents where they were not to blame. CHOs provide replacement vehicles to innocent parties after an accident to help them can stay mobile until their own vehicles are repaired or a cheque is received if the vehicle is written-off.

As a new service there was little legal guidance available on operations and costs. In the early days the amounts of money involved were small, and the large number of motor insurers initially ignored the new industry. But as the sector grew and insurers sought to engage with credit hire, the number and disparate nature of CHOs made that difficult. Moreover as insurers had largely ignored the needs of non-fault motorists involved in accidents, CHOs became very attractive to claimants.