10 January 2017

The CMA drives for for clarity in the car hire industry

New rules mean that car hire companies must make their prices clearer

Car hire is one of the subjects that fills the inboxes of financial journalists and regulators alike, and in 2014 the Competition and Markets Authority (CMA) took up the gauntlet of improving the situation for UK consumers.

By far the majority of complaints related to users pitching up at the desk thinking they had already paid for their car hire in full, only to be told that they needed to pay extra fees for fuel, that there was a surcharge as they were under 25, or to be told that they ‘needed’ to buy extra insurance as the cover they had included didn’t cover a whole host of potentially holiday ruining costs.

The CMA’s first priority was to tackle the big car hire companies operating in the UK, (Avis, Budget, Enterprise, Europcar, Hertz and Sixt) and demanded changes to the way they displayed the full cost of car hire.

This year they are taking this a stage further, and have enforced a series of changes on both car hire brokers and comparison services (which amalgamate prices from a series of hire companies and brokers) As about half of all holiday rentals are booked through these companies, the CMA wants to ensure there is clear information for consumers in the following areas.

The comparison services now need to ensure that the price displayed includes the following so called ‘mandatory’, or unavoidable fees:

• Young driver surcharges

• One way fees

• Fuel charges

And car hire brokers must, as well as the above, ensure they provide full information covering:

• Excesses and the cost of reducing or removing them

• Pre-authorisation or deposit levels

• Exclusions from the Collision Damage Waiver policy

• Winterisation fees (snow chains, winter tyres)

The new rules came into effect on the 1st January, and sites should now be reflecting the changes. It is however fair to say that this is a massive change for an industry that encompasses not just the 6 giants of the industry but tens of thousands of rental firms from right around the world who need to ensure that they are meeting local requirements as well as the rules set by the CMA. A settling in period should therefore be expected.

An example is in the case of young drivers fees, where many brokers fail to ask driver’s ages, therefore meaning that they omit young drivers fees on the basis they were not aware it was relevant. Others have chosen to stop offering one way rentals or any options other than a Full to Full fuel policy to save them the hassle of reprogramming their systems. This has the result of reducing choice rather than enhancing the situation for users.

Additionally, whilst the CMA has defined the above ‘mandatory’ fees, there are others that are still not being highlighted. Out of hours fees for those arriving late at night or mandatory insurance costs for drivers over 70 (a common practice in Spain) are examples of fees that do not fall within the CMA’s guidelines.

Hopefully, as the situation settles, more companies will widen the choices they offer and the final ‘drive away’ price will expand to include every fee that cannot be avoided.

Clarity is exceptionally important to us here at Moneymaxim and whilst all our services meet the new standards, many go further.

Our car hire excess insurance comparison service details a range of standalone protection policies that give customers the opportunity to save not just over the prices charged at the desk, but on those offered through the brokers too. Car hire brokers have joined the bandwagon of companies ‘marking up’ policies they sell to the extent they can charge often four times the price of similar polices available through the MoneyMaxim service. Tens of thousands of users now use MoneyMaxim to ensure they get the best value policy for their needs.

And our new car hire service Clarify Car Hire includes not just the mandatory fees specified by the CMA but also those that are more hidden in the terms and conditions – as the site name suggests – Clarification is the key!

^{Example savings}

^{Rental Cars charge £16.10 per day on a two day rental in Malaga between the 16th and 18th February, CardelMar £7.99. Similar cover for the excess, tyres, wheels, underbody and roof costs through the MoneyMaxim panel costs from £1.77 per day.}