Motor Codes has suspended its vehicle warranty products code of practice after the administration of online retailer Autoquake highlighted problems with the protection it provides to customers.
Autoquake was signed up to Motor Codes’ warranty code of practice but it could not guarantee cover policy payouts when it went under.
A retailer that was signed up to Motor Codes’ warranty code of practice went into administration which meant cover policy payouts could not be guaranteed.
Chris Mason, managing director at Motor Codes, said: “Subscribers to our warranty code commit to protecting policy payment funds.
“If a court-appointed administrator makes this unenforceable, by not recognising the separation of funds set aside for claims payments, customer protection is in question.
“We’ve taken the step of temporarily withdrawing our warranty code and will explore alternative ways to ensure that the consumer is not left in limbo should a retail operator fail.”
Mason said the decision to suspend the code should not be seen as a “retrograde step”.
He said: “We have reacted to a Motor Codes subscriber highlighting the issues experienced with the administration process as soon as they became apparent.
“We are committed to ensuring that consumers can choose a warranty product with confidence and OFT has recognised the importance of this voluntary action.
“OFT is keen to work with our subscribers and wider industry stakeholders to seek a practical solution that gives maximum protection to the consumer.”
Motor Codes will report on progress of its consultation, with a view to reinstating a code for warranty customers.