Dear All

Please see below an extract from the RAC’s response in regards to the Petition and complaint lodged with them.

As expected it was not positive.

It is interesting to read that they state that the issuance of the Carnet is not covered under the FCA, CMA or the EC.

I shall need to clarify this in due course.

Further to the RAC’s reply, I shall now forward the petition and a letter of complaint to the FAI and wait for their response.

The petition now has over 450 signatories which is a fantastic response, however it would be wonderful to have more. So if you could please continue to share this petition it would be really appreciated.

Many thanks for all of your support

Martin & Nicole
(if you would like to chat with us or have any ideas on how to progress the complaint feel free to contact us through our Facebook Group or on any of the forum posts out there)

“Dear Mr McGowan,

I write in response to your email of 30 December to Chris Woodhouse, who has asked me to respond on his behalf.

As you rightly point out, RAC reviewed the carnet scheme that it operates in 2013 to address a number of historic issues that had been causing administrative issues both for RAC and for carnet-holders. We are confident that our customer service has improved during this period and that the system and documentation are now a lot clearer. We always welcome any feedback on specific issues and always invite people to raise specific concerns they may have on customer service with us. We have responded in full to the complaints that we have received from yourself and are satisfied that the customer service that you have received has been prompt and efficient.

We regret that other carnet-holders feel that they have not received prompt responses and have chosen the petition as a way of raising their concerns. We are unable to comment on their individual circumstances in correspondence with you, and would urge them to write to us directly with their specific concerns so that we can examine their individual issues and respond in full.

From 2013 we have made some changes to the way that we calculate vehicle values and to our terms and conditions. All changes have been made in conjunction and under the advice of the FIA and our insurers and are in line with our obligations under the carnet scheme. The changes only applied for new carnets and we have included updated information on our website and communicated the changes to all customers when they have contacted us for new carnets.

You are correct that RAC has removed the option to secure carnets via cash deposit and bank guarantees for commercial reasons. The time taken in processing carnets and claims that were secured by this method and the relatively small numbers of individuals who chose to take up those options made these options financially unviable for RAC.

You mention that the insurance does not provide any “cover” for the carnet holder because the insurer can still pursue the carnet-holder. This is correct – a carnet-holder cannot expect any “cover” for failure to perform an action (export the vehicle) which is completely within their own control.

By taking out a carnet, the carnet-holder is making a contract with RAC promising to export their vehicle from that country. The security, in whatever format, is intended to cover RAC’s liability to the customs authority to ensure that the customs authority receives the relevant import duties. However, the individual is still in breach of contract to the RAC and the RAC (or its insurer) is therefore entitled to recover any damages that it suffers as a result of this failure.

If a customer wished to get cover for their failure to export a vehicle, they would need to seek this elsewhere as this is not the aim of the carnet scheme. However, we are not aware of any insurance company that would provide cover against a deliberate act of breach of contract. You may be able to acquire insurance against events that would prevent the return of the vehicle, but again this is not the aim of the carnet scheme and you would need to take your own advice as to how best to address this risk.

Refusal to allow UK car owners to access alternative services in the EU

You are no doubt aware that the carnet scheme is operated under an international Customs Convention and operated by the FIA. In participating in the carnet scheme, RAC is bound by the terms of that convention and the rules of the FIA. As you have correctly identified, all clubs have recently been reminded by the FIA that the letters of Non-Objection should only be issued in exceptional circumstances. We therefore have no option but to comply with this. See Section 3, AIT/FIA Guarantee Agreement/ART.10 – Procedures for protection of the system:

a) An Association will issue AIT/FIA documents only in respect of vehicles registered in the country of the issuing Association. If, exceptionally the above condition is not met, the issuing Association which receives the request for a carnet must consult the Association in the other country concerned as necessary in order to ensure that adequate guarantees are obtained.

Therefore Carnets may be issued to residents of countries where there is no issuing club and also if written authorisation is received from the issuing club in which the vehicle is licensed, however, we would only grant permission in exceptional circumstances. Unless exceptional circumstances are proven we would be unable to provide you or members of Overland Sphere a letter of non-objection for the ADAC.

We note your comments on this issue and have already passed on comments of this nature from our customers to the FIA but we remain bound by their guidance.

You mention in your email that you consider this to be “in breach of Competition and Markets Authority (CMA) rules, Financial Conduct authority Rules & the European Commission’s rules by preventing UK vehicles owners from 1) accessing alternative services providers in Europe & 2) access to alternative financial products and services not offered in the UK”.

The carnet scheme is not a financial product and does not include any element of insurance for individuals or any other financial services element. Therefore this product is not governed by the FCA.

In relation to your comment about the CMA and the EC; these are not relevant to the carnet scheme as RAC is essentially performing a public function of general economic interest under the Convention.
Therefore we are not carrying on a commercial activity that would be caught by the EU competition rules – issuing clubs do not compete against each other in an economic market for the issuing of carnets in the same way that individual EU Member State government entities do not compete against each other for the issuing of passports to their citizens.

As a final comment, we note that the petition contains many references to RAC holding a monopoly on carnets. RAC are indeed the only organisation that issues carnets in the UK. This is not a circumstance of our own making and we have not sought exclusivity on provision of carnets. It is open to the FIA to appoint other issuing authorities and, indeed, the AA did provide carnets historically.

Whilst we are unable to comment on reasons why other entities may not wish to provide carnets, we would point out that the carnet scheme is very burdensome in terms of administration of carnets, individual customers’ issues and claims. We make very little in the way of profit from carnets and have only chosen ourselves to continue to offer the product to support motorists and our ambition to be the Motorists’ Champion. For this reason it is particularly disappointing that we have received a complaint of this nature, which largely relates to issues that are beyond the control of the RAC. “