Companies that charge driver rates for the recovery of parking ticket debts are operating with an average profit margin of more than 60 percent, has revealed a government document.
The Ministry of Housing, Communities and Local Government (MHCLG) declared that this figure indicates a “market failure”, while the AA described the “disproportionately high” margins.
Parking operators use debt recovery agencies to pay unpaid tickets, often adding £ 70 in additional rates per ticket for drivers.
These positions will be prohibited when the then conservative government introduced a code of practice in February 2022, but this was withdrew four months after a legal challenge by parking companies.
A new consultation document that establishes the proposed code of the current Labor Government declared that the limit of £ 70 is “probable that it will be higher than it can be justified reasonably”, but it is “looking for additional evidence.”
He added that recovery agencies have “an average profit margin of approximately 63 percent.”
This is “comparable to highly innovative companies” despite the fact that companies involved providing “standard services such as the provision of the payment plan,” according to the document.
He continued: “Therefore, we do not consider that they provide significantly innovative services, and as such, high profits can be indicative that these companies have too much control over the market, indicating that there is a market failure.”
Parking operators can take drivers to courts if they continue to resist the payment of tickets.
The MHCLG said that the debt recovery agencies would reach the balance point with rates of approximately £ 26 per ticket, if the proportion of those who paid was stable.
Jack Cousens, head of the road policy in the AA, said: “The 63 percent benefit margin feels disproportionately high for the services provided.
“This only highlights the need to stop the sector and guarantee balance for all.
“There is a cohort too jealous among some private parking operators where they deliver cases to debt recovery companies for seemingly harmless charges.”
He added that the prohibition of debt recovery rates in the original consultation was “the correct position” and claimed the latest version “does not reach the brand.”
Steve Gooding, director of the Charity Alanco Research Organization, the RAC Foundation said: “The profit margins revealed by the Government help explain why there are now more than 180 private parking companies that buy records of DVLA vehicle guardians so that they can send demands to drivers: it is a huge and profitable business.
“The failure of the private parking industry with the time of being more open about its activities is part of the problem and its continuous reluctance to open their books to official scrutiny shows why ministers must continue with the plans to bring transparency and independence to this sector.”
The recent analysis of the PA news agency and the RAC Foundation found that 43 million tickets were issued by private companies to drivers from the United Kingdom between April and June.
That was an increase of 24 percent compared to the same period last year.
A BPA spokesman said that “the government's profit calculations strongly dispute” and requested that “publish the methodology behind these figures.”
He continued: “The numbers presented are misleading and do not reflect the reality of the debt resolution sector.”
He insisted that the purpose of debt recovery rates is “not to generate profits, but to act as a fair and effective deterrent element against the lack of deliberate payment.”
An MHCLG spokesman said: “This government inherited a private parking market that lacks transparency and protection for motorists.
“We share its frustration, so our Private Parking Practice Code will increase the standards in the industry and account for parking operators.
“We consult the current limit on debt recovery rates and publish our response as soon as possible.”
