Nearly half of all warranty providers have signed up to Motor Codes’ new code of practice for warranty products, which has gained stage one approval from the Office of Fair Trading (OFT).
The warranty code used to be called the mechanical breakdown insurance (MIB) code, but was refreshed as it had not been changed since 1990.
Motor Codes, created by the Society of Motor Manufacturers and Traders to act as a single point of contact for self- regulated codes, had been working on the revision for more than two years.
Warranty Direct, Car Care Plan, Mondial, Global Insurance Management and The Warranty Company have all signed up to the new code.
Warranty providers that subscribe must abide by guidelines created to protect the consumer and must make the dealer aware of these guidelines when providing products.
However, it is the warranty provider, not the dealer, that is responsible for maintaining standards to keep the warranty code.
Chris Mason, Motor Codes’ director, told AM: “It’s a long process to gain stage two approval, but we’re hoping to do it within a year.
“The five companies that have signed up probably represent 40-50% of the warranty product market.”
Once the code has gained stage two, businesses signed up will be able to show the OFT logo.
Mason said the warranty code, as well as the new car and service and repair codes, would be publicly launched on July 14. Each code had its own marketing packages to promote them and Motor Codes would be pushing the publicity of them online.
The vehicle warranty code requires members to:
- Give clear pre-contractual information to consumers so that they can make an informed decision on the suitability of a warranty.
- Give clear information on what is covered.
- Provide a cancellation period of at least 14 days.
- Give consumers access to an independent arbitration scheme for products that do not fall within the remit of the financial ombudsman service.
- Agree to be subject to independent disciplinary procedures for failing to comply with the code.