Used car dealers will be scrutinised in the coming months as the Office of Fair Trading (OFT) launches a market study into the sale of second-hand cars.
The move comes after more than 68,000 consumers complained to the OFT’s advice service Consumer Direct last year about issues with used car sales.
Concerns about defective vehicles, services and potentially misleading selling are consistently among the top complaints to the OFT.
The study, to be completed by the end of 2009, will
investigate the reasons behind the high level of complaints and consider whether existing consumer protection legislation is sufficient and effective.
It will focus on used car dealers rather than private sales and will work with the industry and consumers.
Motor Codes, which administers codes for new car sales, service and repair and vehicle warranty products, said a used car code “would definitely be something we’d consider”.
A spokesman said such a code would show a further indication of the industry’s willingness to address consumer concerns.
“We’re very keen to engage and help the OFT with this study,” he added.
Retail Motor Industry Federation director Sue Robinson said a used car code would “provide a benchmark standard for the overwhelming majority of businesses, and serve to exclude those who do choose not to meet the requirements”.
She added: “Honesty and reliability are most important when selling used cars, and the vast majority of businesses that retail used cars are reliable and reputable, but there are a few rogue traders at the fringes whose dodgy practices damage the image of the industry.”
Robert Perkins, managing director of independent used car retailer Park Road Garages in Bedfordshire, said he believed only a small percentage of used car dealers “left little to be desired”.
“Personally, I don’t think it is necessary because I’ve always tried to be fair, but I think the study will be a good thing and help us. It will separate the wheat from the chaff,” he said.
He believed a used car code could be positive, so long as it made good business sense.
Eddie Hawthorne, managing director of Arnold Clark, did not believe the market study was necessary.
But he thought a code was a likely outcome and Arnold Clark would participate in it.
“From a customer’s perspective, they have to have confidence to go through the process of buying a used car,” he said. “If I’m a member of a code that means a customer has more confidence in buying, then I will give it a go.”
Motorpoint operations director Paul Winfield said consumer protection legislation introduced by the OFT already amounted to a code of practice.
“At Motorpoint we take treating customers fairly extremely seriously and have put systems in place across all areas at great expense to make sure it is policed correctly,” he said.
“I think the problem lies with the sole traders selling only a couple of cars a month, who don’t have the most robust systems in place.”
Winfield said the OFT already heavily policed the new and second-hand car market through Trading Standards: “I can’t see what difference this study would make. It will probably just confuse the issue.
“Given the current rules and regulations governing dealers, any additional consumer protection really isn’t necessary, especially given that so many consumers are already up to speed with their rights before they have even purchased the vehicle.”
Winfield did not expect any changes to be made but thought all companies concerned would be reminded about their duties under existing consumer protection legislation.
However, consumer champion Which? said used car sales were still an area of concern for consumers.
Senior researcher George Marshall-Thornhill said: “It’s high time the OFT investigated used car sales, as shady practices such as clocking and cloning are rife. New technology could help prevent these crimes, but only if bodies such as the DVLA and ABI start working in an integrated way.”
The OFT said the cost of car clocking alone was estimated to be £100 million a year,
Legislation to date
Miles Trower, senior associate at Osborne Clarke, said there is already a raft of legislation which protects consumers in the UK when buying a used car from a trader.
This ranges from the Sale of Goods Act 1979 – designed to ensure that the vehicle must be of satisfactory quality (bearing in mind its price, mileage and age); meet any description given when sold and be fit for purpose – to the Consumer Protection from Unfair Trading Regulations 2008 which prohibit traders from treating consumers unfairly and require businesses not to mislead consumers (whether through acts or omissions) or subject them to aggressive commercial practices.
In addition, consumers may benefit from other rights (e.g. in terms of cancellation irrespective of any fault) where their purchase is
conducted and concluded remotely, such as online, under UK distance selling rules.
Under the Sale of Goods Act, if a car does not meet the required standards – albeit the standards for used cars will naturally be lower – the buyer can pursue a number of different remedies, ranging from rejection (and recovery of the purchase price) if the fault is serious and the consumer acts quickly, to repair or damages; in other words, a reduction in the price.
If the buyer returns a faulty vehicle to the trader within six months, it is up to the dealer to prove the car was not faulty at the time of delivery.
If the dealer agrees to repair the car, the repairs must be carried out at the dealer’s expense, within a reasonable time and without causing
significant inconvenience to the buyer.