I work within the car body repair industry and you are right in branding it a semi-legal rip-off. It is becoming virtually impossible to run a car body repair business without being bullied into using these accident management companies.

Some work providers have fined body shops for not referring enough non-fault repairs. The method of remuneration has been skewed to inflate non-fault labour charges whilst discounting normal accident repair rates.

For example, some insurance companies set a high labour rate for all work but demand a large bottom line discount from the repairer but invoice the third party's insurance at the higher amount pocketing a profit of at least 20%.

Body Shops are asked to collect all cars as soon as a policyholder has an accident, regardless of how small, so that the policyholder is in an expensive credit hire car for the maximum amount of time. It seems that most insurance companies are now establishing their own credit repair and hire operations so it would appear that the people making money out of this are actually the insurance companies and the car hire outfits (who probably have to give a proportion of their profits to insurance companies), or in which the insurance companies perhaps have a financial interest.

However, UK car manufacturers are now jumping onto the bandwagon and forging relationships with the major credit repair companies and threatening to remove manufacturers' approval status of bodyshops that will not refer non-fault work.

Meanwhile, actual rates are constantly being cut for car body repairers (rates are as low as £21 per hour) and customers' premiums increase year-on-year. As many of these cases involve litigation, payment can be delayed 6 - 9 months to Body Shops in some instances.

This whole situation is driving many repair businesses to the wall, which will ultimately mean long delays in car repairs and potentially spiralling car hire costs and therefore premium increases in the future.

We even have situations where perfectly good cars are being written off because the third party insurers are reluctant to authorise repairs with a customer in a high cost replacement vehicle. Should there be a delay in obtaining parts the liability escalates and insurance is all about containing losses. Credit hire started as a good idea: it was unfair to have ones car written off or put into an unroadworthy condition and then be without transport for 4 weeks whilst the claim was being settled.

It should never had been considered viable, however, that a driver of a Mercedes Benz should be given a comparable vehicle. The costs involved would ultimately inflate insurance premiums. But not only are drivers given a comparable vehicle, they are actively encouraged to seek medical damages and bodyshops are made to steer customers in this direction even when it is clear the driver just wants to use their own insurance company or is happy to deal direct with the third party insurers.

You can therefore see that there are so many strands to this problem: unacceptable repair costs, unacceptable car hire costs, unacceptable bottom-line rates to body shops, unnecessary scrapping of repairable vehicles, increased costs to the consumer, encouragement of litigation.

As you say, it needs a slumbering authority like the Office of Fair Trading to launch an investigation. What is more worrying is that if we were to publically condemn this practice, most of our work providers would cease to use our company. I would be happy to discuss this issue further but therefore have to stress that our discussions would have to remain completely confidential. That in itself shows, I think, the extent of the problem.