The Credit Hire Ruling – Why it Matters

The recent Court of Appeal decision in Yehuda Tescher v Direct Accident Management Ltd and Axa Insurance UK plc v Spectra Drive Ltd [2025] EWCA Civ 733 provides welcome clarification on non-party costs in credit hire claims. It highlights that some longstanding adverse practices in the credit hire sector continue to affect the industry.

In Tescher, the claimant sought nearly £20,000 in credit hire charges for a period during which their personal injury claim failed. The Court found that Direct Accident Management Ltd (DAML) was the true economic beneficiary and had exercised “tacit control” over the litigation. As a result, DAML was ordered to pay 100% of the defendant’s costs.

The rulings make clear that the protection of Qualified One-Way Costs Shifting does not extend to third-party companies who are, in substance, directing litigation for their own commercial ends.

In Spectra, the Court held that Spectra Drive Ltd also exercised sufficient control and stood to benefit from the litigation. They were ordered to pay 65% of the defendant’s costs.

Why this matters

We welcome these judgments. They reinforce the principle that credit hire organisations (CHOs), which effectively control or drive litigation, cannot avoid the consequences when a claim fails. 

The rulings make clear that the protection of Qualified One-Way Costs Shifting (QOCS) does not extend to third-party companies who are, in substance, directing litigation for their own commercial ends.

These decisions should act as a deterrent to aggressive or excessive litigation practices. For too long, certain behaviours within the credit hire sector have risked undermining trust in the claims process, exposing claimants to unnecessary involvement in litigation and contributing to prolonged disputes and increased costs across the industry, and driving up premiums.

Alps believes these decisions support a fairer, more transparent approach to credit hire. With over 25 years’ experience in road traffic accident claims and motor legal expenses insurance, we have long recognised the importance of working only with credit hire partners whose practices align with the interests of customers and the integrity of the claims process. We deliberately avoid referral arrangements with providers who engage in tactics that may unnecessarily prolong claims or escalate claims into litigation. Instead, our hire partners are selected based on clear governance, transparency, and customer-centred processes.

We believe this ruling supports the kind of hire and claims behaviours that lead to better outcomes for customers and insurers alike. It also serves as a useful reminder of the need for continued scrutiny around who is truly driving a claim and in whose interests.