ABI Proposes Reforms To Salvage System to Prevent Write-Off Fraud & Theft
Six loopholes in the salvage system which need to be addressed are being set out by the ABI’s Director of General Insurance Policy, James Dalton, at a speech to the salvage trade body today.
The Salvage Code of Practice – a voluntary agreement on how written-off vehicles should be processed and categorised – has been blamed by some for creating a market for stolen cars. West Midlands police have identified an issue with criminals stealing vehicles to use for parts to go in write-offs which are considered safe to return to the roads and have been bought cheaply at auction.
Speaking to the British Vehicle Salvage Federation’s AGM, James will reject calls to crush higher numbers of vehicles simply to inconvenience criminals, highlighting the cost to the environment and waste of materials.Instead, steps should be taken to improve the security of the salvage chain. In particular, James challenges the salvage industry to reconsider why it allows salvage vehicles purchased at auction to be paid for in cash, given the fears that have been raised about the involvement of organised crime gangs.
The six potential loopholes James identifies, through which criminals may exploit the salvage process, are:
- weaknesses in the online notification process of changing registered keepers of vehicles;
- deficiencies in the process for obtaining duplicate or replacement logbooks potentially enabling criminals to easily “clone” a vehicle’s identity;
- the fact that a vehicle can be a financial write off but will retain its MOT certificate;
- the lack of a Vehicle Identity Check (VIC) for repaired write-off vehicles;
- the lack of a sufficiently robust ‘know your customer’ and ID verification process at vehicle salvage auctions;
- that salvaged vehicles can be purchased in cash at auction.
One auction firm has already stopped accepting cash payments and others in the salvage industry are encouraged to follow suit.
James Dalton is due to say:
“What we as an industry are not prepared to do… is to mandate an increase in the number of vehicles that should be repaired given the safety issues that would pose. Nor are we prepared to crush a larger number of vehicles that are perfectly repairable. This would increase costs and represent significant unnecessary waste and damage to the environment. That, it seems to me, would be a disproportionate response to the problem of increased vehicle theft.
“The solution lies in a coordinated approach involving insurers, salvage dealers, vehicle manufacturers, Government and the Police. I am confident that coordinated approach exists and it now needs to be given the opportunity to work through the issues. But the public also have an important role to play – motorists should be wary of buying second-hand cars that are much cheaper than might reasonably be expected. The old adage applies – if a deal seems too good to be true, it probably is. And in this instance, the car may have been poorly repaired with stolen parts, with all of the risks inherent in this for the purchaser.”