Ethics in finance
‘Dispatches’ is a wake-up call on improving provenance checks
Undertaking proper provenance checks should be at the heart of any financial transaction involving vehicles, but as one recent Channel 4 programme showed, that's not always the case. James Marquette, head of data relationships for Total Car Check, which in 2021 conducted over 41 million checks against 11 million unique vehicles, offers his perspective.
In mid-August, Channel 4 broadcast Dispatches: Why Is My Car So Expensive? Although the programme focused on broader issues covering the current UK car market it also resurfaced problems with vehicle provenance checks.
Cargiant and Cazoo, two vehicle retailers, were investigated by undercover journalists over their due diligence practices. They found that the retailers had both unknowingly put up for sale a written-off vehicle, despite claiming to have undertaken rigorous checks.
A spokesperson for Cargiant said that only in one instance was a vehicle found for sale that had been previously written-off and on discovery of the vehicle's history, it was removed from sale.
For retailers and motor finance providers, the programme demonstrates the risks they face when buying, selling and financing vehicles.
Transacting with previously damaged vehicles can lead to losses, reputational damage and claims from claims management companies aside from the safety issues presented to customers.
It also outlined the importance of undertaking effective vehicle provenance checks in today’s market, which is seeing greater numbers of older used vehicles changing hands at above-normal market prices. So if vehicle history is not checked sufficiently the risks are arguably higher.
Dispatches didn’t spend too much time drilling down into why the checks undertaken by these retailers failed. Below are the key underlying problems.
Provenance checks are not undertaken at all
Ian Ferguson, the vehicle claims expert interviewed in Dispatches suggested that provenance checks are not always being made. Although this was likely to be aimed at private purchasers, many retailers and lenders could be at risk where vehicle provenance is not assessed. Prospective buyers should be asking retailers for the vehicle history reports they generate. Retailers should be keeping the reports for their records and including these with the vehicle’s handover documents. Lender underwriting teams should be obtaining copies of the reports if they are not undertaking the checks themselves.
Delays and inaccuracies in the supply of data
It is a legal requirement for insurers to report a written-off vehicle to the DVLA. The vast majority of write-offs are recorded using the motor insurance anti-fraud and theft register (MIAFTR). However, there are no timeframes set within vehicle regulations on how quickly these should be reported. Sometimes long and complex claims can also take time before a write-off is registered. This can lead to checks showing a vehicle to have no accident history when in fact it has been written off. If insurers aren’t working as quickly as workshops then this could mean the vehicle is sold with gaps in its accident history.
Salvage data is not universally available or accessed
A safety net for the slow reporting of write-offs is salvage data. If a vehicle has been advertised for sale by a salvage yard then it is likely to have been written off or sustained damage. A vehicle service provider worth its salt should offer a salvage check that scans online salvage auction adverts for the vehicle being checked. The problem is that not all vehicle history providers offer a salvage check and there is no industry standard database of salvaged vehicles.
Inaccurate vehicle history reports
A write-off may be registered against a registration plate that wasn’t on the vehicle at the time of an accident. The record may also only contain partial information. Where this issue occurs, some vehicle history products do not identify vehicles that have been written off. Industry-leading providers use advanced logic that incorporates a range of information provided by insurers to multiple features of the vehicle - rather than just relying on the VIN or VRM.
How should the industry respond to Dispatches?
The insurance industry and Motor Insurance Bureau have been working on improving the write-off reporting process since 2019 after a separate investigation highlighted mismatches between MIAFTR and the DVLA’s records.
They understand how damaging the slow reporting of write-offs can be and we hope they will soon be introducing a new system that flags where vehicle write-off claims are in progress - providing earlier warnings.
Ideally, salvage yards should work more closely with vehicle history providers to share data openly. There is a role here for trade bodies to assist with and standardise the process. If this can be achieved, there could be opportunities for salvage businesses whilst helping to improve vehicle provenance information and better protect vehicle buyers.
Improvements may also come from retailers and lenders considering the vehicle history check products they use. Do they provide a salvage check and embed advanced logic into their reporting? These elements will vastly improve their ability to identify written-off vehicles.