Friday, 24. May 2019
I have been very vocal about many of our disgraceful recording systems that affect peoples lives. Take the Credit Reference Agencies. Virtually every penny of the £1.6 trillion of consumer debt was approved after consulting one, two or all three credit reference agencies.
And yet did you know that there is no legal obligation on any lender to record your transactions on any of the credit reference agency platforms? It’s ridiculous and amateurish! There is also no obligation on car finance providers to record their transactions on HPI and Experian platforms.
That’s right they don’t have to record if your car is on finance – it’s purely voluntary. In law as long as you ask the seller of a car if the car is on finance and as long as he says no, if it is on HP, PCP or conditional sale you are an innocent buyer and you own the vehicle. The finance company cannot get the car off you.
So when you read about a driver who has been confronted by a finance company who shows them that the car they bought privately was on finance with the finance company and that the person they bought the car from had no right to sell the car, therefore they own the car – it’s nonsense. They may even ask the driver if he checked the car on HPI. And when drivers have said no the finance company has said they must hand the keys over – supported by the motor magazine.
The problem is that if you hand over the keys you have no further rights to the car unless you were bullied. The point here is that because there is no legal obligation to record finance details on HPI (or Experian) there is no legal obligation on you to check before you buy.
So much for all the hype around HPI and the need to check HPI to see if the car is on finance. But even worse Auto Express (AE) and the BBC have revealed that even though new rules have been introduced covering written off cars and the need for insurance write-offs to be recorded on the platforms – they aren’t and as a result write off cars have found their way back onto the road.
An undercover BBC investigation found that written-off cars are being repaired and sold to unsuspecting motorists after passing their history checks
A BBC investigation has found that cars previously sold as write-offs at salvage auction are passing their vehicle history checks, and being sold at major second-hand car dealerships to unsuspecting buyers.
The undercover research, shown on BBC1’s Rip Off Britain, echoes the investigation AE published in March, which found cars that have been deemed insurance write-offs following serious accidents are passing vehicle history checks with a clean bill of health.
Vehicle history checks are relied on by countless buyers every year to reveal whether a car is subject to outstanding finance, has mileage irregularities, has been stolen, has previously been scrapped or has been deemed an insurance write-off.
While Auto Express’s research focussed on the loopholes that allow these written-off cars to pass their history checks, and highlighted examples of these cars being sold via online classified sites, the BBC sent undercover reporters to the UK’s largest used car retailer, Evans Halshaw, and two other big-name dealership chains, Arnold Clark and Car Store.
The researchers found cars that had previously been sold at salvage auction as write-offs had passed their background checks, and their true history had not been uncovered by the retailers. Forensic car expert John Dabek told the BBC he was surprised the dealers hadn’t spotted the cars had been repaired following serious accident damage.
The retailers involved either blamed the data systems they relied on for history checks or said they had carried out all the checks they could.
Prior to the BBC’s investigation, Auto Express uncovered a number of cars, that were sold at a salvage auction having been classified as ‘Cat S’. This means they were written off after sustaining serious, structural accident damage, and were only allowed back on the road after having been properly repaired.
Despite this, all of these models passed the vehicle history checks offered by both HPI and Experian AutoCheck, and were being marketed to consumers as never having been written off.
AE found 10 cars that had been sold at a salvage auction as declared Cat S write-offs, making a note of the VIN plates displayed in the salvage listings. They paid for HPI and Experian AutoCheck history checks, cross-referencing VINs and registration plates with the reports. Some of the cars generated alerts for outstanding finance or mileage discrepancies, but not one check from either HPI or Experian flagged any of these cars as an insurance write-off.
Auto Express was alerted to this issue by a reader who uncovered inconsistencies with history-checking companies after buying a used car he discovered had previously been sold via a salvage auction. As well as a conventional history check, the reader used a company called www.vcheck.uk, which crosschecks a car’s write-off status against salvage auction records.
After AE learned of this problem, they contacted vcheck and were provided with a number of cars that had raised similar concerns.
How do vehicle history checks work?
Experian AutoCheck and HPI – the two biggest players in the business – told AE that they exclusively rely on the Motor Insurance Anti Fraud & Theft Register, or MIAFTR, to determine if a car has been written off.
MIAFTR is a nationwide database run by the Motor Insurers’ Bureau (MIB), and 97 per cent of insurance companies subscribe to it. When an insurer writes off a vehicle, those subscribing to MIAFTR place it on the Register as a write-off. Some history-check businesses outsource to these two companies. The AA relies on HPI data, for example, while the RAC uses Experian.
- MIAFTR is non-mandatory, and not all insurers use it
It is a legal requirement for insurers to inform the Driver and Vehicle Licensing Agency (DVLA) when a car is written off, but it is not a requirement for them to use MIAFTR to do so – MIAFTR acts as an electronic funnel, automatically informing the DVLA of write-offs, assuming these are uploaded to MIAFTR.
The MIB told AE that “97 per cent of the motor insurance market currently subscribe to the MIAFTR database to load the details of their written-off vehicles”. There are 203 UK motor insurance companies authorised by the Bank of England, meaning six do not use MIAFTR; it therefore follows that cars written off by these six insurers are unlikely to be detected by history checks.
- Third-party-only insurance
The MIB suggested that a car may not be detected as a write-off “if the vehicle is not comprehensively insured”. Because third-party insurance does not pay out for damage sustained to the insured vehicle itself, such cars will not have been declared a total loss by the insurer, so may not be on MIAFTR.
- Delays in updating MIAFTR
The Motor Insurers’ Bureau told us some insurance firms “load manually or in batches” when placing cars on MIAFTR, creating potential delays. Some of the cars AE analysed were auctioned as write-offs more than a year ago and were still not detected by the history checks they ran, though.
Furthermore, data obtained via a Freedom of Information request shows the DVLA was informed of 7,676 Cat D and Cat C cars in the 2018 calendar year – even though Cat D and Cat C write-off classifications were replaced by Cat S and Cat N in October 2017.
This means that vehicles placed on the DVLA’s database as Cat C and Cat D in 2018 must have been assessed as write-offs the previous year under the old classifications, with a delay of at least three months.
- Weak legislation
Legally, insurers must inform the DVLA when a car is written off, but the MIB says “there is no mandated timeframe for supplying write-off data to the DVLA”, creating potential delays even in the official database. The closure of the Vehicle identity Check (VIC) scheme in October 2015 could also have a part to play.
The VIC scheme saw a ‘marker’ placed against Cat C cars (now Cat S) on the DVLA database. These cars had to pass a VIC test, where an inspector would assess them before the DVLA would remove the marker and issue a new V5C logbook. The VIC test didn’t assess the quality of repairs, but if inspectors noticed a “serious defect which would make the car dangerous”, they would issue a prohibition notice, and the car could not be driven. Cat S write-offs now only need to pass an MoT test before being put on the road.
- Paper-based write-offs
Further DVLA data obtained via a Freedom of Information request reveals that 4,870 vehicles were written off via paper notifications over the past five calendar years. These cars bypassed MIAFTR when being placed on the DVLA’s database, so would be unlikely to show up in checks.
- History checks relying solely on MIAFTR to check for write-offs
MIAFTR is non-mandatory, subject to delays and may not hold records for written-off cars that only had third-party insurance. So for history-checking firms to rely solely on its data to determine a car’s write-off status is problematic.
How widespread is the problem?
| Write-off category |
No. vehicles on MIAFTR |
No. vehicles on DVLA database |
Difference between MIAFTR & DVLA |
No. vehicles on MIAFTR |
No. vehicles on DVLA database |
Difference between MIAFTR & DVLA |
|
2016/17 |
2016/17 |
2016/17 |
2017/18 |
2017/18 |
2017/18 |
| Cat A |
8,926 |
8,851 |
75 |
9,502 |
9,370 |
132 |
| Cat B |
105,805 |
115,325 |
-9,520 |
109,417 |
119,559 |
-10,142 |
| Cat C |
325,324 |
367,093 |
-41,769 |
152,084 |
177,089 |
-25,005 |
| Cat D |
166,718 |
211,100 |
-44,382 |
83,783 |
110,407 |
-26,624 |
| Cat S |
343 |
0 |
343 |
101,798 |
123,579 |
-21,781 |
| Cat N |
432 |
0 |
432 |
140,694 |
148,431 |
-7,737 |
| Total |
607,548 |
702,369 |
-94,821 |
597,278 |
688,435 |
-91,156 |
Auto Express obtained data from the DVLA showing how many write-off ‘transactions’ the agency processed during financial years 2016/17, and 2017/18. The MIB provided AE with the number of write-offs it held records for over the same periods. Data from both organisations is for vehicles, so includes trucks, vans and motorbikes, as well as cars.
There is a significant difference between the two organisations’ databases, with nearly 100,000 fewer written-off vehicles a year appearing on MIAFTR compared with DVLA records. Even after removing from the equation Cat A and B vehicles – which must be scrapped and can never be driven again – these numbers give a clear idea of the discrepancies between MIAFTR and the DVLA’s database.
What do the organisations involved say?
AE sent HPI and Experian details of three sample cars that were previously written off but passed their history checks. HPI consumer director Fernando Garcia told us: “Where third- party data is found to be inaccurate or factually incorrect, HPI will work with these partners to ensure that consumer safety remains the main priority and is not compromised in any way.”
Stressing that HPI “constantly monitors the quality of the data it generates and receives”, Garcia said: “If the consumer conducts an HPI Check and it did not show the Vehicle Condition Alert Register information, they would be covered by our guarantee if they adhere to our terms and conditions.”
An Experian spokesperson said the company understands “the cause for concern with the three vehicles highlighted”. Experian explained that it uses MIAFTR “to check whether a vehicle has been marked as ‘written off’ by an insurer”, but that “as none of the three vehicles were recorded as a total loss, they did not show as ‘written off’ on the vehicles’ provenance reports. We will continue to work with our data and insurance industry partners to establish the circumstances behind these three vehicles”.
The Motor Insurers’ Bureau, the organisation that runs MIAFTR, added that “Cat S write-offs will receive a V5C document from DVLA… [that] should alert keepers to the status of the vehicle”. The MIB also stressed that “CAT S and N vehicles can be repaired and legally driven again”.
The DVLA simply said: “Insurance companies are required to notify DVLA of all accident-damaged vehicles.”
What are the potential consequences for car buyers?
Safety
It is impossible to tell from photos how well these cars were repaired after their accidents, but buyers of Cat S and Cat N vehicles are typically advised to commission an independent mechanical inspection before making a purchase – a course of action far less likely with a car believed not to be a write-off.
Financial loss
Cars that have been written off are worth significantly less than their non-write-off counterparts. Anyone who bought a car at standard market value and subsequently finds out it was declared Cat S or Cat N stands to make a substantial loss when they sell it on, assuming its true history is subsequently detected in history checks, or the owner finds out it was written off. It is an offence to knowingly sell a written-off car without declaring its write-off status.
How can buyers protect themselves?
The majority of written-off cars are loaded onto MIAFTR and picked up by history-checking companies, but AE’s investigation will undoubtedly raise concerns among second-hand car buyers. Consumers seeking additional reassurances could consider paying for a mechanical inspection, which should determine whether a car was repaired following a serious accident.
Buyers are also offered some protection by a history-check guarantee. Both HPI and Experian AutoCheck will pay up to £30,000 to ensure buyers do not suffer financial losses as a result of their checks – although terms and conditions apply to these guarantees.
A third option is to make use of www.vcheck.uk, where you can get a basic check against salvage records for free.
Of course the fourth option would be to only take new cars supplied by GHA Finance! By Graham Hill
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