CMA probe: U-turn on proposed compulsory audits to improve quality of repairs

The Competition Markets Authority (CMA) has revised its previous decision to recommend compulsory audits to improve the quality of at-fault and non-fault repairs.

In its provisional remedies report, published today, the CMA said: “On balance, there is insufficient evidence of a detrimental effect on consumers for us to find that poor quality of repair has an adverse effect on competition.”

But the CMA said it still believed there were grounds for concern about some repairs not being carried out to the legal standard.

The CMA, formally the Competition Commission, had said in December that insurers and claims management companies (CMCs) did not monitor the quality of repairs effectively and added there were significant limitations to consumers’ ability to assess the quality of repairs.

But the CMA now “accepts” that claimants were generally able to assess the quality of repairs which affect the appearance of their cars.

And although a number of insurers said that reputational effects meant that insurers had a strong incentive to provide a high quality of service, the authority did not see evidence that reputation over the quality of repairs was important to competition at the point when consumers purchase car insurance.

But the authority “remained of the view” that some insurers were not monitoring repair quality sufficiently to ensure that consumers receive the standard of repair they are entitled. It added that insurers left it largely and unduly to claimants to identify repair deficiencies.

Following a consutlation with the industry, insurers told the CMA that the evidence was not based on a broadened view of the market.

A number of repairers said the CMA had attached too much weight to evidence from a small number of repairers suggesting that cost pressures could lead to ‘corner cutting’.

Insurers also provided new evidence on how they monitored repair quality within their approved network, which the CMA said gave a mixed picture.

In the report today the CMA concluded: “We hope that by shining a light on industry practices and by making these observations we may encourage insurers and others involved in managing repairs to improve the ways in which they ensure that consumers receive the repairs to which they are entitled.”