Plan Insurance Blog

Will Uber's appeal be successful?

Since September 30th, Uber is no longer licensed by Transport for London (TfL). However, the private hire app may legally continue to operate until all appeal processes against the regulator’s decision not to renew its licence have been exhausted.

When announcing on September 22nd that it was rejecting Uber’s application for a renewed licence, TfL stated that:

“Private hire operators must meet rigorous regulations, and demonstrate to TfL that they do so, in order to operate. TfL must also be satisfied that an operator is fit and proper to hold a licence.”

The regulator cited the following issues as being at the heart of the decision:

“Its approach to reporting serious criminal offences.
Its approach to how medical certificates are obtained.
Its approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.
Its approach to explaining the use of Greyball in London – software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties.”

It was on those grounds that TfL determined Uber London Limited to not be “fit and proper to hold a private hire operator licence.”
Many in the industry and media have viewed TfL’s decision cynically. It has been labelled as political grandstanding. How can a regulator that has taken such a soft touch approach to the American tech firm suddenly change tacks so abruptly?
Mayor Sadiq Khan subsequently backed the regulator on the grounds that “all companies in London must play by the rules”. He countered the business community’s argument that the decision makes London look unattractive to tech firms by saying that innovation “must not be at the expense of customer safety and security”.
Have the Mayor and the powers that be at TfL really had enough of all the hassle and constant controversy? Or, as this writer suspects, are they posturing for their critics, playing the tough guy temporarily with a preconceived plan to concede in a few weeks or months with the defence that “well, they’ve promised to play nicely now”?
After all, Mr Khan has presented himself as a friend of the cab trade and, as a Labour representative, he won’t want be seen to be giving Uber an easy ride in light of their ongoing dispute over pay and working conditions for their drivers.
So, if it is all just a big charade, for it to play out convincingly, Uber London Limited will still have to demonstrate a commitment to changing its ways, to some extent at least. In this blog we’re looking at the actions Uber will have to take and the concessions they will have to make in order for the decision to be reconsidered.

What does Uber need to do to get its licence renewed?

Below are the top 6 actions Uber will need to take in order to stand any chance of a successful appeal. Whether the app-based firm is capable of making real change and addressing these key points is another matter.

Play to the crowd

Love them or loathe them, you have to admit that their lobbying and PR machine is mighty effective. And as a matter of priority, the American company sort to get its spokes people out there getting its side of the story across.
In a short space of time, they’ve managed to:

  • Issue an apologetic statement saying “we’ve made mistakes”
  • Get the media to ramp up the threat of 40,000 lost jobs (a number many in the industry question)
  • Gain hundreds of thousands of signatures on a petition from members of the public worried about having to pay more to get home after a night out.
  • Convince the Prime Minister to announce her opposition to the decision.

That’s pretty much the perfect play book if you’re trying to apply pressure to the authorities responsible for your fate.

Safeguard the public

Both TfL and the Mayor stated worries over public safety were a pivotal reason for the failure to grant a new licence.
In the weeks leading up to TfL’s announcement, The Sunday Times published correspondence obtained under the Freedom of Information Act that had been written by Inspector Neil Billany to the Head of Taxi Licensing at TfL, in which Billany expressed concern over Uber’s policy on reporting sexual offences.
He accused Uber of risking the public’s safety by failing to notify the Met of sex attacks and other “serious crimes” committed by its drivers against passengers. The officer highlighted an alleged incident that is said to have taken place in January 2016.
The public exposure to this horrendous lack of judgment by the private hire firm may well have been the nail in their application’s coffin. The ride hailing app’s management will need to explain why it failed to report crimes of this nature to the Met Police force and to come up with a good reason why TfL can believe them when they say that it will never happen again.

Fixing their flawed procedures

The regulator also highlighted concerns over Uber’s approach to obtaining medical certificates and how DBS checks are carried out.
On the medical certificate front, there was an undercover report in October last year that exposed a number of Uber drivers who had paid for approval from GP’s without actually being examined. Though it is hard to know if this is exactly what TfL are referring to, as they were not explicit. Unless they are exposed as being involved in a larger conspiracy (which, judging by the number of drivers involved, appears unlikely), even the harshest of Uber critics might have sympathy for the app provider if they are being held responsible for the actions of a rogue medical professional?
In regards to checks by the “Enhanced Disclosure and Barring Service (DBS) checks” all private hire drivers in London must be referenced against the Government agency’s database. These searches will find any criminal records or police warnings regarding an unsuitability to work with children and other potential issues.
Following a recent policy review, TfL decided in July of this year to no longer accept checks that were performed by the third-party provider, Onfido. They now only accept checks that have been carried out by its own contractor. TfL declined to provide details of its concerns about Onfido and other providers, but they appear to relate to issues with incomplete information being passed on.
TfL’s concerns were so severe that they wrote to approximately 13,000 private hire drivers to inform them that their background checks were invalid. The drivers were handed 28 days to reapply or risk having their licence revoked. Onfido did not perform checks exclusively for Uber but their drivers did form the majority of those requiring re-submission. Onfido unsurprisingly denied any deficiencies in its vetting process. The firm claimed that TfL simply wanted to maintain an exclusive contract with its own provider, GBGroup. Rumours have since emerged that an unhealthy relationship existed between Onfido and Uber, that potentially may have resulted in a conflict of interests. However, this is very much speculation at this stage.
At the time, Uber defended itself on the grounds that

“these background checks are all carried out by the government’s Disclosure and Barring Service. Uber does not process the background checks, does not require potential drivers to use a specific provider, and does not have a say in who gets licensed. It is ultimately up to the regulator (TfL in London) to review the application and DBS check and decide who is granted a licence.”

Supplying valid medical certificates and DBS checks are relatively simple procedures to adhere to. An operator that takes its duty to safeguard the public seriously would follow them as a matter of course. From reviewing the information in the public domain, it could be argued that TfL’s mentioning of these issues is perhaps a smoke screen by the regulator to distract from the deficiencies in their own procedures.
However, there may be more information on these two issues that is not currently in the public realm. If that’s the case, before TfL will have a change of heart, Uber will need to provide documentary evidence that any issues that could have potentially grave consequences for the public have been tackled in a very real way. Whether TfL will chose to believe them is another matter.

Open up and play by the rules

In their announcement, TfL highlighted Uber’s use of “software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties”.
This referred to a custom-built piece of software called ‘Greyball’ that could be used to deceive London private hire enforcement officers. In foreign territories, compliance teams have attempted to track down the firm’s drivers and the operator would use the tool to show them a fake version of the Uber app and conceal their real location and help to avoid inspection.
This is an unbelievably brazen act that shows a complete disregard for the role of a regulator. There is no proof that Uber have used the software in London. However, with the potential for their compliance officers to be treated with such contempt it is not surprising that TfL have exerted their authority in such a way. Whether a company with such deep rooted management flaws can regain the trust of those that hold their fate in their hands remains to be seen. A full, open disclosure of their drivers locations will be required, but it may take a large leap of faith from London’s transport authority to believe in what their seeing.

Changes at the top

Since the decision was announced, it has been revealed that Jo Betram Uber’s Regional Manager for Northern Europe has quit her role.
Though in her statement she said the move is completely unrelated to the failed application, it is hard not to see it as being beneficial to Uber’s cause. This outcome allows the company to present the regulator with a more convincing case that they will adopt a fresh approach.
It should also help that in recent weeks Uber’s controversial co-founder Travis Kalanick has been ousted from his role as CEO. The company’s new chief executive Dara Khosrowshahi is a far more conciliatory figure.
In an open letter published after TfL’s decision, he apologised for “the mistakes we’ve made” and accepted that the company had “got things wrong”. He also promised after the announcement to “make things right” with London.
Mr Khosrowshahi is due to personally meet with TfL representatives and will no doubt launch a charm offensive aimed at ensuring Uber may continue to operate in the city.

Pay up

If they are successful with their appeal and Tfl time the verdict right, there will be the increased licence fee of £2.9 million due – a small sum when you’re valued at $70 Billion. The regulator claims these increased fees are required to allow for effective compliance enforcement.
How long will Uber’s appeal last? Well, the firm have 21 days to lodge an appeal against the decision post the expiry of their current licence. So they will definitely be operating at least until October 21st. Beyond that, it’s hard to say but the Mayor said he suspects that “it will take some time before this situation with Uber fully plays out.” Whether he’s intimating that a long drawn out court case might be required – who knows?

Other Issues

All of the points considered above overlook the additional controversies that Uber have been embroiled in such as: the amount of tax paid, employment status and worker conditions, accusations of plying for hire, distracted drivers using sat navs etc. Instead, we have focused purely on the concerns that TfL mentioned in their statement. Who’s to say that other factors didn’t play a part but TfL chose not to cite them due to possible legal challenges? Uber must address these issues if it is to convince London’s transport regulator that it is a fit and proper operator that can be trusted with safeguarding the public.