The Federal Government is expected to launch an inquiry this week into the dealings between vehicle insurers and smash repairers. It’s the latest move in a long-running industry saga that has everything to do with politics and little to do with efficiency.

The inquiry is likely to delay the implementation of a proposed voluntary code of practice for insurers dealing with smash repairers – which the insurers showed no signs of supporting, anyway.

Small Business Minister Joe Hockey said at the weekend that he will probably announce the inquiry soon. The Sunday Age newspaper reported that insurers were bullying smash repairers into using cheap parts in order to keep prices down.

The Insurance Council of Australia (ICA) denies that insurers put pressure on smash repairers to engage in unsafe practices. Executive Manager Corporate Affairs Rod Frail says the interests of the insured “should be paramount when dealing with this inquiry”.

“To suggest that insurers would condone shoddy workmanship is completely untrue.”

Mr Frail says a code of practice could have a detrimental effect on competition, and vehicle repairers should produce evidence of exploitation by insurers before campaigning on the issue.

“The Australian Competition and Consumer Commission has acknowledged that insurers are acting responsibly, and we are still waiting to see some evidence to the contrary.”

ICA has offered to help the Federal Government with its inquiry.