Is Our Consumer Credit Legislation Fit For Purpose – I Think Not!

Wednesday, 23. January 2019

This year I’m on a campaign to change our consumer credit laws, especially in the areas of motor finance. We have two products that account for the vast majority of new car finance, contract hire and Personal Contract Purchase (PCP). Contract hire accounts for about 85% of company acquisitions whilst Personal Contract Hire (PCH) is now starting to take market share away from PCP which has recently dropped from 85% of consumer new car registrations to 80% in 2018.
However, PCP is now being used by more people to finance used cars, estimated to increase the number of live PCP contracts to around 5 million. The point is that we have two major finance products that are fudged in legal terms. Legally there are no such products as PCP or PCH even though they represent the largest number of agreements.
Take out a Hire Purchase agreement or personal loan agreement and you are pretty much covered for all eventualities by the UK laws that govern them. But take out a PCP or PCH and you are referred to the Consumer Credit Act which was never set up with Contract Hire or Contact Purchase in mind. This means that the providers can pretty much include any terms they like into the contract without fear that they are breaking any laws.
 
Look at the top of a PCP agreement and it will show it as a Hire Purchase Agreement – which it isn’t, it’s a Hire Purchase agreement with a load of conditions. The same with PCH, it will show it on the documents as a Hire Agreement Regulated by The Consumer Credit Act 1974, at a time when PCH didn’t exist. So each finance providers cave pretty much free reign to include any terms and conditions the see fit to include. 
 
Two examples of confusing situations come to mind which cause all sorts of problems with consumers. The first is one that relates to PCP and what is known as Voluntary Termination (VT) which is the ability under clauses 99 and 100 of the Consumer Credit Act to hand your car back once you have paid 50% of the total owed.
The problem here is that the lenders don’t like it because it can lead to losses, especially if the car has covered very high mileage. As an example say you VT’d the car after 2 years of a three year contract. Your contract mileage was 10,000 per annum so you should have only covered 20,000 after 2 years but let’s say you covered 28,000 miles. Your excess mileage is 10 pence per mile so you should be charged a pro-rata excess mileage figure of 8,000 miles at  say 10 pence + VAT = £960.
 
This is the argument put forward by lenders. In fact this is incorrect and flies in the face of the Consumer Credit Act that was created before such things as excess mileage. So the law states that you can hand the car back to the lender irrespective of the mileage. However, when Renault pushed for payment from a customer and the Financial Ombudsman Service got involved they found in favour of Renault. It would be so easy to include a few changes to current legislation or introduce new legislation that dealt with PCP and set down a rule. It would save lots of confusion.
 
The issue that comes to mind with PCH is the extension of contracts. Every leasing company that allows for an extension (not all do) have a different way of calculating the lease extension rentals, which is wrong. There should be a standard method to remove confusion and make the extension transparent. I have a case against Mercedes Benz who increased my monthly payments by 20% for an extension even though my mileage was running at much less than my contracted mileage. Laws should make life less complicated – not more!
 
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By Graham Hill

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New Car Sales Down In 2018 But Not Disastrous

Friday, 18. January 2019

The usual headlines appeared as soon as the new car sales figures were announced. Headlines such as New Car Sales Fall Off A Cliff made it seem like new car sales had dropped by 50% from the previous year. They didn’t, the drop was 7% or 100,000 cars dropping from just over 2.5 million in 2017 to just under 2.4 million in 2018. So not the disaster that reports would have you believe.

 

With an average of 200,000 new cars being registered every month keeping us in second place to Germany in the EU is hardly a major disaster. Believe it or not Jaguar increased by 4% but then their problems, along with their sister marque, LandRover have suffered from a drop in demand in China, the US and Middle East.

 

It seems that the main drops were amongst the volume producers such as Ford, Vauxhall, Nissan and Audi. Changes to the emissions regulations threw a massive spanner in the works. Manufacturing slowed as some manufacturers struggled to meet the emissions levels with some stopping production altogether. Then having sold off all the pre-emissions tests cars there were no new cars in stock to sell so drivers either extended current agreements or took on a used car.

 

So my feeling, given the circumstances is that new car sales in 2018 were pretty buoyant. My real concern was over alternative fuels. But first a few words about diesel cars. 62% of new cars bought in 2018 were pure petrol cars compared to 32% pure diesel. You may think this is a good thing given the reports about emissions and the need to get diesel cars off our roads. The fact is that it is old diesel cars that we need to get off the road. New diesels are virtually particulate (soot) free and whilst NOx emissions are a little higher CO2 emissions are lower so in terms of damage there is very little to choose.

 

The question that never seems to be raised is that of mileage. Clearly, if people drove their cars less they would reduce emissions irrespective of the fuel used. The sad news is that just 5% of new cars registered in 2018 were either diesel/electric or petrol/electric hybrids. And even worse for the environment was that just 0.7% were pure electric cars. This of course wasn’t helped by the Government removing the grants completely from hybrid cars and reducing those on electric cars.

 

The car industry was in good shape last year but the move towards a better environment is flagging badly! Something needs to be done and the Government needs to give better direction to diesel/petrol drivers as we are about to see warnings in the press again about the Ozone layer as a result of the increase in petrol car drivers increasing CO2 emissions. By Graham Hill

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Some Notable Things Happened In 2018 – The Industry Review

Friday, 11. January 2019

£500 Overspend On Petrol: Drivers can spend £500 per annum more than necessary depending on where they fill up.

Daily Insurance Claims Hit £33m Per Day: Car insurance payouts ran at £33m every day in 2016 whilst premiums hit a record high.

1.4 Million Drivers Attended Re-Training Courses: Drivers who were caught committing motoring offences attended courses raising £54 million for the police in the process

9,050 Drink Drive Casualties: The highest on record since 2012 with 2016 7% higher than 2015.

Council Parking Revenue Up To £1.58 Bn In 2017: New figures revealed that this produced a surplus of £819 million.

1,024 Children Banned From Driving: Even though they weren’t old enough to drive

39% Drop In Phone Penalties: Motorists caught using a mobile phone whilst driving dropped from 49,694 in 2016 to 30,470 in 2017. This was put down to fines and points doubling. Or maybe it’s down to fewer police and hands-free fitted to more cars.

109 Driving Instructor Investigations: The DVSA cracked down on inappropriate relations between driving instructors and students.

Superfluous Road Signs: 4.3 million road signs were shown by the Department for Transport to be superfluous.

15% Of Motorists Report Being Blinded By Headlights: According to research carried out by the RAC

The Average Fine For Car Theft Was £198: With 80% of crooks receiving a fine rather than a jail sentence.

The Average Age Of Cars On UK Roads Is 8.1 Years: The Department for Transport revealed that the average age increased from 7.8 years in 2015 and 6.8 years in 2003.

8,000 Crooked Car Washes: The CarWash Advisory Service estimated that 8,000 of the 20,000 hand car washes are involved in illegal activities.

5.65 Million Parking Tickets Handed Out In 2017: The Government has pledged to clamp down on private firms.

Pothole Claims Run At £1million Per Month: The AA revealed the scale of the claims.

89,000 Vehicles Stolen In 2017: Vehicle theft went up from 56,000 in 2016 to 89,000 in 2017. Blamed on police cuts and thieves managing to crack keyless technology.

80% Of New Cars Were Bought On Finance: According to Auto Express I gave tips on PCP deals along with revelations. An influencer!

London Reduced Speed Limit: Sadiq Khan said that all roads managed by Transport for London would have a 20mph speed limit

Drivers Overspend £3.4bn On Repairs: Green Flag indicates that drivers spend £3.4bn more than they need to.

20% Reduced Reaction Times: University of Bath reported this drop in reaction time as a result of a hangover.

£106 million Government Investment In EV’s: This investment in vehicle and battery development was matched by £500 million investment from industry.

27% Of Those Killed On Our Roads Were Not Wearing Seatbelts: 1,793 people lost their lives on the roads in 2017, 27% were found not to be wearing seatbelts.

Audi Fined £700m For False Emission Figures: German authorities imposed the fine on Audi for ‘deviations from regulatory requirements’ over V6 & V8 diesel engine emissions.

Diesel MOT Failures Hit 238,871: Following new MOT rules – a fourfold increase.

2.3 Million Cars Clocked: One in 16 cars display a false mileage reading with the Local Government Association calling for the ban of mileage correction devices.

So there you have it – some of the major issues and statistics of 2018. What will 2019 bring us – well we will find out soon enough! By Graham Hill

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Used Car Buyers Could Be Putting Their Lives At Risk.

Wednesday, 5. December 2018

There are many drivers who would never entertain driving a new car – usually for all the wrong reasons. ‘They depreciate quicker than a used car’ – not necessarily so if you go for a nearly new used car! I’ll have a training video for that! They cost more to service! Some new cars can be 2 years old before they need their first service which is just an oil and filter change. And a new car certainly doesn’t cost more to maintain and is covered for at least 3 years, 60,000 miles by the manufacturer’s warranty.

 

But even worse than this is the number of used cars that are ‘clocked’. This is the name given to the practice of reducing the miles showing on the car’s odometer. It is illegal to do so then sell the car on with the customer believing that the mileage on the clock is genuine.

 

The Local Government Association (IGA) which represents 370 councils in England and Wales found a large surge in the number of vehicles that had been clocked. In fact 0ne in 16 cars are clocked according to the IGA at a cost to buyers of £800 million every year. This is the difference between the value of cars on their genuine mileage and the value on the clocked mileage.

 

But more important for me is the potential danger of driving a car that has had the mileage adjusted. Many service and maintenance alerts are mileage based so by winding back the mileage it can throw out the alerts which means you could be driving a car that is seriously dangerous not only to the driver and passengers but also pedestrians and other road users.

 

This situation has been in existence since before I learned to drive with my dad and that was a very long time ago. And the same loophole still exists in the law. It is technically illegal to sell a car that has had the mileage clocked it is still legal to alter the mileage of your car. The EU was to introduce a law in May making it illegal to advertise the electronic devices used to clock cars but that legislation has been delayed.

 

Councillor Simon Blackburn from the LGA said ‘Car clocking is a major rising fraud, that not only rips off motorists but can have dangerous implications. The proposed EU ban on mileage correction services needs to be made part of UK law as soon as possible’. Automotive data company, HPI, found one in 16 cars had a mileage discrepancy, with the number of clocking incidents rising by 25% between 2014 & 2016. Something needs to be done urgently – lives could be at risk.

 

In a final piece of research I have found a warning from Autonet Insurance Group saying that if you buy a car that has been clocked, so the declared mileage to the insurer is incorrect, you risk making your insurance cover invalid. So you need to make sure you take every precaution to ensure that the mileage is correct. You have been warned. By Graham Hill

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General Public Now To Become Traffic Police

Tuesday, 4. December 2018

A new police unit has been set up to deal with dash cam and helmet cam footage showing drivers committing offences as part of a Government road safety initiative.

 

The announcement of the creation of this new unit was made by the Department for Transport (DfT) as a 2-year plan to make roads safer. In their announcement, they stated that it is intended, ‘ to combat road rage, encourage greater mutual respect between road users and protect the most vulnerable’.

 

The task force does not yet have a name but will be a ‘national back office’ serving police forces. An initial investment of £100,000 has been put in to test the waters. No information is yet available as to how the public will get the video footage to this team but according to AutoExpress they feel the new scheme will operate in the same way as Operation Snap that was introduced in Wales.

 

When piloted it reduced the time taken to review footage from up to 15 hours (really?) to just 15 minutes. There are 7 offences that the public can report using video footage as follows

Dangerous Driving

Driving Without Due Care & Attention

Careless Driving

Using A Mobile Phone

Not Wearing A Seatbelt

Contravening A Red Traffic Light

Contravening Solid White Lines

The DfT says that dash cam footage and video from motorcyclist and cyclist cameras could lead to investigations for ‘other offences where the driver is clearly not in proper control of the vehicle and which could lead to collisions’. By allowing drivers to submit video footage they believe that they will be able to increase detection rates at no extra cost.

 

The 2-year plan also includes allowing local authorities to issue tickets to drivers parking in cycle lanes with penalties from £70 to £130 in London. Councils will also be encouraged to spend 15% of their local transport budget on cycling and walking infrastructure. Personally, the whole thing concerns me as I can see a rapid increase in road rage. By Graham Hill

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How To Resolve Disputes With Dealers

Thursday, 15. November 2018

My previous blog was entitled Is The Consumer Rights Act Fit For Purpose? I give a typical example of how consumers are being ripped off by dealers not willing to honour their legal obligations. I also give a number of actions that customers can take that will help them to get a result.

 

After a lot of research, I have come across what I believe is a better solution. The RAC has a legal insurance policy called Legal Care Plus. It covers much more than a normal legal cover extension on the average car insurance policy.

 

The important cover is:

 

Motor Vehicle Consumer Disputes

RAC will cover up to £5,000 in legal costs following a breach of an agreement relating to the sale, purchase, hire or servicing of a motor vehicle.

 

I spoke to a representative who confirmed that this would cover warranty disputes as a result of the vehicle being faulty. In addition, it covers legal costs and expenses for uninsured loss recovery, for example, loss of earnings to the tune of £100,000. Where you have an accident that was not your fault you can also recover your excess.

 

Along with other cover, the policy looks really good to me. And the cost? Just £15 per annum. Always take professional advice before taking out an insurance product. By Graham Hill

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Is The Consumer Rights Act Fit For Purpose?

Thursday, 15. November 2018

I’ve just been reading yet another story about someone trying to reject a faulty car and not being allowed to by the dealership. What the hell is the point of an act of Parliament to protect consumers if it is totally toothless when you try to apply it?

 

What Car reported an incident that involved a lady who was driving a nearly new BMW 1 Series, bought with 2,200 miles on the clock for £22,000. After 5 days and 93 miles the car broke down, it shuddered, misfired and lost all power. The oil warning light came on and the onboard computer stated there was a problem with the drivetrain.

 

The lady driver stated that the car broke down in a dangerous position but she managed to get it to limp to a safe place then made a long walk to a friend’s house. After advising the supplying dealer it was a week before the car was collected. They then called a day later saying that they had driven the car for 60 miles and couldn’t find a fault so suggested that she could collect the car.

 

Following the non-repair the car has suffered sporadic electrical problems leaving the lady with no confidence that it might break down again leaving her stranded. As a result the lady wrote to the supplying dealer telling them that she wanted to reject the car under the 30-day rejection rule as part of the Consumer Rights Act. She was told by the dealer that she couldn’t reject the car as there was nothing wrong with it.

 

As reliability and safety were all important to her, especially as she is normally in the car alone, she still wasn’t happy. She wrote to the dealer advising them as such and informing them that she wanted to return the car for a full refund.

 

They replied by explaining that as there was nothing wrong with the car she couldn’t return it for a refund. But they offered another 1 series that they had in stock as a replacement. The car was cheaper than her original car so she would be financially out of pocket as they refused to refund the difference. The lady felt that she had been treated appallingly – sadly she isn’t alone.

 

So what was the outcome when she wrote to What Car?

 

They, first of all, confirmed that she was within her rights to return the faulty car for a full refund. The car was considered to be of unsatisfactory quality as the car was, and continued to be, faulty. And as it was likely to break down again leaving the lady stranded it was also considered to be unfit for purpose. All of which I totally agreed with.

 

What Car suggested that the lady go back to the dealership and reiterate what they had said to her. She did that and on the same day the dealer got straight back to her and said she was wrong about her consumer rights and she could not reject the car. As a result What Car contacted BMW’s UK head office to ask for their intervention – which they duly did. The following day the dealer called her and agreed to a full refund.

 

Now whilst this may look like a great outcome and in the case of the lady concerned – and it was but in my opinion, it is wrong on so many levels. Not least of which the dealer will receive the car back with a fault – so given their attitude will they fix it? No, they won’t because they don’t believe the car is faulty. So will they continue to sell the car until someone accepts their argument and accepts the faults or pays for the fix themselves – if it can be fixed? I suspect that this is the route they will take.

 

Solution 1: Record on HPI and Experian that the car had been rejected and list the reasons. The dealer wouldn’t do this automatically because it alerts the new owner so they would need to be obligated to by law. But if we do that we will need to make it compulsory for lenders and insurers to record finance links and insurance damage – something that isn’t compulsory at the moment. Ridiculous. We need changes.

 

If you experience a fault immediately after taking delivery of your car (within 30 days), either new or used, from a dealer or trader (not private) you should reject it immediately by putting it in writing. An email or a letter should do (I suggest a letter that is signed for). If the issue is minor such as say a loose piece of trim that can be easily fixed you can give the dealer an opportunity to fix.

 

Remember you don’t have to give the dealer an opportunity to fix within the first 30 days but the fault does have to be genuine, you can’t just change your mind about the car. I’ve heard of situations whereby the customer has a fault and insists that the dealer refund the cost. The dealer (as in the case above) takes the car back, repairs the fault then says that a fault didn’t exist. So this is where my next piece of advice is all important.

 

If your car suffers a fault take as many photos and/or videos that you can with your phone showing the car running badly, an item not working and certainly warnings that appear on the dashboard. Don’t put yourself at risk so get the help of a friend or relation to take photos if the fault occurs and you can get someone else to video it whilst you’re driving.

 

The next thing is to register your complaint with Trading Standards. The more people that complain the better the picture that Trading Standards will have of the dealer. If the dealer has a bad record of not treating customers fairly and meeting their legal obligations you may find that they come to a quick solution. And Trading Standards have legal clout.

 

The problem is that you can no longer contact Trading Standards direct. You have to go through the Citizens Advice Consumer Helpline and they decide whether to refer to Trading Standards. In most instances that won’t be a problem – just a minor delay.

 

Make sure that you don’t sign any forms, simply write to the dealer advising that you want to exercise your rights under the Consumer Rights Act 2015 to hand the car back for a full refund and explain why. Some dealers will hand you a form to sign which may have a string of conditions included – they are not legally enforceable but they’ll try it on. Don’t sign it.

 

You can write to the manufacturer as well, as happened with What Car and also to any trade association of which the dealer is a member. Most are members of the Society of Motor Manufacturers and Traders. They should be able to refer you to an independent dispute resolution body but make sure that it isn’t the Motor Ombudsman as I don’t believe they are totally independent. You can only use them if the dealer is a member which costs them money so I believe their advice cannot possibly be totally independent.

 

It should also be born in mind that if you buy goods from a shop, say a kettle from Argos, it is the responsibility of the shop if the goods are faulty, not the manufacturer. Once the shop has resolved your complaint it is then up to the retailer to take up the issue with the manufacturer – nothing to do with you. A manufacturer’s warranty is in addition to your legal rights – not a replacement. However, this isn’t the case with a Franchised dealer. He trades as an extension of the car manufacturer as a ‘franchisee’ so when you deal with the dealer you also deal with the manufacturer.

 

The manufacturer has a reputation to maintain so it isn’t unusual for them to overturn a local decision made by their franchisee. So if you don’t get satisfaction from the dealer certainly go for the manufacturer.

 

Finally, check your home and car insurance policy if you have legal cover. At worst they will give you legal advice at best their lawyers will write to the dealer. By Graham Hill

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Mobile Phone & Speeding Offences Dropping

Wednesday, 24. October 2018

According to car warranty providers Warranty Direct mobile phone and speeding offences are decreasing. They have found out that using a mobile phone whilst driving offences have dropped by 44% and speeding offences have dropped by 8.5%. They came to this conclusion after analysing data from the Ministry of Justice over the last 5 years.

 

They put this drop down to increases in fines and penalties introduced in March last year. Really?? Their analysis showed that each time penalties or fines have been increased this has been followed by a drop in prosecutions. Last March not only saw fines increase, the penalty points awarded if you were caught using a mobile phone behind the wheel also increased from 3 points to 6 points.

 

The CEO of Warranty Direct, Simon Ackers, said to What Car, ‘It’s great to see these updated driving laws have had a significant, positive impact on driving behaviour in such a short space of time’. ‘I don’t believe it’s just the increased financial penalties, either; motoring authorities have increased their efforts to raise awareness of the dangers of unsafe driving’.

 

According to road safety website, Think, you’re 4 times more likely to be in a crash if you’re using a mobile phone whilst driving. OK, I don’t have a problem with the above but could some of the drop in prosecutions possibly be down to the drop in the numbers of police out and about able to catch those breaking the law?

 

In Sussex, where I live, you can go days without seeing a police car and I don’t think they have a local plod. Speed cameras were switched off years ago and even little hidey holes that mobile speed detectors used to hide away in to catch you speeding are no longer used. So it’s great that offences are down but is it because fewer people are breaking the law. I personally don’t think so. By Graham Hill

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Billions Of Pounds Of Car Spare Fakes Putting Lives At Danger

Wednesday, 24. October 2018

The EU’s Intellectual Property Office (IPO) says the number of fake parts fitted to cars on British roads is on the increase. They have estimated that over £2 billion of fake tyres and batteries alone are fitted to cars across Europe. In the UK investigations have revealed that the most common fakes fitted to cars are filters and lights but the fakes that can put lives in jeopardy are brake pads and airbags.

 

The IPO has explained the huge increase in fakes is mainly due to problems identifying the fakes from the originals. In order to sort the problem out the IPO has joined forces with manufacturers BMW and Audi, selling platforms Amazon and eBay as well as numerous part suppliers. They have come together to issue guidance on how to spot fake car parts.

 

One of the recommendations was to have dealers or garages source parts for you and fit them rather than source parts yourself and then ask a dealer to fit them. You might save money by sourcing parts yourself but if the dealer sources the parts then he is responsible for the job from start to finish including the parts he provides. They can’t guarantee a part that you provided yourself.

 

Audi pointed out how difficult it was to identify the fakers from their websites that are looking more and more professional and as genuine as the websites of genuine providers. Their ‘Brand Protection Team’ finds it more and more difficult identifying the crooks from their website. The first indicator is the price that is ‘too good to be true’. The next is spelling. Often there is the slightest of spelling mistakes that alert them and should alert you. That applies not only to the website but also the packaging.

 

I remember years ago a friend that owned an electrical shop ordered in some Sharp calculators that were at giveaway prices. They looked exactly the same as the original, the logo looked exactly the same but when you looked closely Sharp was spelt Shrap. He asked everyone who came into the shop to tell him what was wrong with the calculator. Hardly anyone saw it as the logo looked so genuine.

 

The quality of the packaging can also be a giveaway. Some manufacturers also put small marks on the packaging to make it easier to detect fakes. What Car suggests that you take your car to a recognised garage, one that is signed up to the Motor Industry Code Of Practice for Service and Repair.

 

I feel that a central database of all fakes found by Trading Standards, Customs and Excise and other regulatory bodies be posted on a ‘Fakes’ website to alert consumers about the fakes and how to identify them. By Graham Hill

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New Fuel Additive That Cleans Catalytic Converters

Wednesday, 24. October 2018

As an avid reader of my regular newsletters and blogs, you will know that you need to run your diesel engine at over 50mph for a minimum of 20 minutes at least once a month in order to clear out the catalytic converter (the same applies to some petrol engine cars).

 

This exercise doesn’t spew the particulates (soot) out of the exhaust, it creates a chemical reaction that destroys the particulates without destroying the environment. However, for some drivers, it isn’t possible to do this on a regular monthly basis so a company called Cataclean has come up with a solution – literally, that you add to your fuel.

 

They claim that by adding it to the fuel it will react within the catalytic converter to not only clean the filters but also all the surfaces within the converter making it not only more fuel efficient but also more efficient at removing NOx and Carbon Monoxide from the exhaust gasses.

 

In fact, Halfords ran a recent promotion saying that if your car failed its MOT test on emissions after using Cataclean they would refund your money (for the Cataclean that is). They claim that the additive causes the fuel to combust more evenly and efficiently whilst not affecting the fuel in any way.

 

You can buy it currently in Halfords for both petrol and diesel engines for £15.99 for 450ml. Users have given it a 5 star rating. If you want to know more about the product and how it works go to  https://www.cataclean.com/products.htm

By Graham Hill

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