News - 2006 Archive
- Safe Route through the LCV labyrinth
- ING Protect can help you save on insurance costs
- Road death risks
- New Child Car Seat Regulations
- Beware - Cash takers
- Things to Consider when Choosing a Leasing Company
- ING Expands with acquisition of Appleyard
- Changing Attitudes to Risk Management
- Reluctance and Risk Assessment
Beware: Cash Takers can damage your business - October, 2006
The proportion of drivers taking the cash option instead of a company car is now a serious business issue, according to Diarmuid Fahy, fleet risk manager at ING Car Lease. Despite the number of cash takers levelling off more recently, there are still practical steps fleet managers need to take to reduce their risk to this hidden danger, he says.
Drivers opting for cash instead of company car have been steadily rising in recent years, following the increasingly aggressive taxation of traditional fleet schemes. This trend has no doubt been fuelled by businesses' disposition to export risk wherever possible, often assuming that by providing cash instead of metal, they have somehow absolved themselves of the risk of corporate responsibility towards their drivers.
Sadly, those that had hoped to outsource their employer responsibility by offering the cash option, have been cruelly misled. Recent developments, such as the Health & Safety Executive (HSE) guidelines on safety at work and the recent amends to the Road Death Investigation Manual (used by the police at the scene of an accident), make it clear that businesses have an undeniable duty of care to all their employees that drive as part of their job. The big problem with “cash takers" is that relatively few companies have effective monitoring and risk management tools in place. And that leaves businesses exposed to legal action in the light of an accident.
But the really sobering thought is the evidence that suggests a significantly large proportion of businesses have no formal process to monitor and manage their “cash-option" fleet.
Having launched cash-option allowances a few years ago, many businesses are now discovering that they have no idea what the allowance is being spent on; whether the vehicle is fit for use, taxed, appropriately insured, regularly MOT'd and safe to drive.
The key action businesses need to take here is the establishment of robust reporting systems to demonstrate that the relevant health and safety policies are in place.
One of the most dangerous omissions businesses make in terms of risk and cash takers concerns clear guidelines on car choice and “rules of engagement" at the outset. Many fleet managers are now in the unfortunate (and highly emotive) situation of playing catch-up with the proverbial horse that has already bolted. Once cash takers have brought a “nail" for next to nothing and pocketed their monthly car allowance, instead of ensuring the vehicle is properly maintained, employers are in a difficult position when it comes to minimising their exposure to risk.
Similarly, companies that have offered the cash alternative rarely bother to check on drivers' licences, their accumulation of points, speeding fines and other driving habits.
And this situation leaves businesses open to heavy fines and even the spectre of court action should the worst case scenario occur and negligence is proven. An example of good management practice can be found with the case of an office products business, which deftly defended itself from possible court action following a tragic accident involving one of its drivers who was using a mobile phone while driving.
By adhering to a strict mobile phone policy that outlawed the use of hand-held phones on the road, the business was able to demonstrate that the offending driver had signed the policy, agreeing to uphold the company's clear line.
Company's need to act now if they fear that their approach to cash-takers leaves them exposed. Here are six tangible actions to consider:
Fit for purpose – A clear written policy on the age, mileage and condition of cars that are acceptable to a cash-only scheme is vital from the outset. Clearly stating the mechanisms and standards of the cash-option alternative is an important first step. Ensure you have a regular audit process set up to check that cars meet MOT standards and are fit for purpose.
Insurance – It is incredible how many cash alternative drivers have forgotten to insure their cars for business use. This needs to be checked regularly to minimise your risk.
Petrol costs – Charging back businesses mileage at private rates can be a great little earner for many drivers. Ensure your business is not being taken for a ride by setting up clear systems to check journeys made and their mileages where possible.
Safety first – As part of the vehicle audit process, fleet managers should be able to check the safety of the car, review its MOT certificate and the last time the vehicle was serviced. Undertaking regular, professional services is a good way of ensuring that the car is safe to drive and should be part of the policy.
Points don't mean prizes – Keeping a weather eye on the performance of your cash-option drivers, especially those that are stacking up penalty points, is rarely done in most businesses. By spotting poor driving habits early, you are reducing risk and addressing the causes of accidents before they have a negative impact on your business.
It's good to talk – Good fleet management for cash-takers is all about good communication; making sure they know what's expected, following up on audit checks and ensuring the processes is properly recorded.