Change in consumer law set to bring industry shake-up, warn experts

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24 August 2015

Legislation labelled as the biggest change in consumer rules to affect the motor trade for decades, is about to come into force – and experts warn the industry is underprepared.

Motor lawyer Mark Reeves says the new Consumer Rights Act is going to have a major impact on dealerships throughout the UK, which will be forced to look closely at their selling practices.

Reeves has teamed up with motor sector learning and development agency RTS Group to design and deliver courses to help dealerships get to grips with the legislation, which comes into force on October 1.

“I have been working in motor trade law for 27 years, and I know the industry is simply not ready for this,” said Reeves. “The new Act means that, when it comes to problems with the product, the ball is firmly in the consumer’s court.”

Though not specifically aimed at the motor industry, it is here the Act will have one of the biggest impacts. According to Trading Standards, Citizens Advice helped with more than 84,000 problems relating to used motors in 2013/14; most complaints were about consumer service, with drivers spending more than £363 million on these complained about cars.

The Consumer Rights Act 2015 requires that anyone buying goods (such as a car), which are found to be faulty within 30 days of delivery can demand a full refund. Known as the ‘early right to reject’, this replaces earlier rules which said a vendor could merely replace or repair a faulty item or part.

Any defect found after 30 days (but within six months), entitles the customer to a repair or replacement – and dealers will have only one chance at repair or replacement. If they fail, the customer is, again, entitled to a full or partial refund.

Reeves said these changes mean dealerships will have to use due diligence in all sales, paying close attention to presale vehicle checks. If they miss or overlook faults, and the customer then decides they want a refund, they could be facing forecourts full of returned motors.

“The Consumer Rights Act is the most important piece of legislation in this area for 40 years, and will prove a huge shock to the franchised dealers. I think it means that motor dealers will have to be much more focused on ensuring that vehicles are free of faults at delivery; greater emphasis on pre-delivery inspections, vehicle health checks, approved used car checks and service schedules.”

Malcolm Miller, managing director at RTS Group, said dealerships were gradually waking up to the new legislation, and his team were taking more and more calls from principals wanting training in the new rules.

“They started as a trickle but we are getting calls from dealerships every day now,” said Miller. “It is a big industry and Mark is quite correct when he says that this is a real wake-up call to traders in their selling practices.”

The legislation applies only to sales between business and consumer – B2C – and affects both new and used goods. It doesn’t affect sales between private individuals, or business to business contracts. Additionally, the new Act comes in on the back of changes in June 2014 to distance selling where, if the contract was made over the phone or internet, consumers were granted a 14-day cooling off period, during which time they have the right to return a product for any reason or no reason at all.

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TS Legal Services - 25/08/2015 16:14

We always welcome any advice and information about changes in law so that dealers can prepare in advance. However I think that if advice is being given in the article, albeit general advice, this should be correct. The article states "... found to be faulty within 30 days of delivery can demand a full refund" which is correct, but then it goes on to say this replaces the right to repair or replacement. This is incorrect as the right to rejection has always been available under the Sale of Goods Act, the only difference was instead of 30 days it states "within a reasonable time". Your article also states that "after 30 days" the right to repair or replacement kicks in - this is misleading as the consumer has the right to repair or replace from the time of delivery if they wish this as an alternative to rejection.
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tony - 25/08/2015 16:53

Personally I can't see how dealers will be able to live with this new law, for any sharp dishonest customers (and they do exist!) it's will be like giving them 30 free car hire. How can anyone possible say that for example a 80000 miles 7 year old car is perfect and has no faults? Anybody could find a fault however small if they look hard enough!! Madness.
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Darren Williams - 26/08/2015 10:47

This article really hammers home a potential tsunami of consumer claims when considered in conjunction with the recent results of the Auto Express Driver Power survey - With a clear lack of skill in our industry to achieve the holy grail of a first time fix how do we adapt? Will there be a need to keep customer vehicles longer for post repair testing which will inevitably increase dealership costs in compensation, car hire and courtesy car costs? - Is there a greater need now to ensure a reduced staff churn in our Aftersales front of house and technical teams as product & systems experience generally leads to a much better FTF ratio - Interesting times ahead
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Andy Laird - 01/09/2015 13:44

This concerns me on so many different levels. I don't see how this law can be passed as a 'one size fits all', not with the complexities of the modern day car, even the best preparation cannot guarantee 30 days fault free motoring, let alone 6 months. The registration of owners on the V5c which is unique to the motor trade means the cost impact could be unfairly disastrous, a 3 owner car coming back as a 4 may push the car outside of a dealers retail standards turning a small retail profit into a big trade loss. What determines a fault? Main dealers selling well prepared non franchise part exchanges will need to choose very carefully and will want to avoid models with a marginal reputation for poor reliability. The value of certain models may drop off of a cliff with all re-sellers wanting to avoid anything risky. This will put many people out of business. Manufacturers who recycle end of contract cars back through the dealer networks will need to help support the increase in customer buy backs with a simplified process and a more realistic contribution, why should the dealer take all the risk? What is the point of the warranty nowadays? Will dealers postpone sending off V5's until 30 days has lapsed? As usual the dealer is accountable. Definitely interesting times ahead.
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Nicolas Raimo - 01/09/2015 15:20

Totally stupid, as many people have mentioned some dishonest customers will take FULL advantage of this and will use it as 30day free car hire in which time they could wake 2000/3000 miles on. Dealers selling cars older than 10 years old with more than 80,000 are really going to struggle as we all known you can Pre delivery check a car then suddenly something breaks. Where the law needs to be changed is ensuring C2C sales are protected with some consumer law this would at least give dealers some of the market back as customer can't just sell are car full of faults to unsuspecting buyers there's so many "customers" who now are mini car dealers who don't offer ANY where near the level of protection we do as dealers I'd argue there's very few bad dealers left and most the BAD dealers are these home traders working for £200
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TS Legal Services - 02/09/2015 16:11

This article has blown the whole change in law well out of proportion and only given half the story. It is important to remember that not all faults will allow the consumer to return a car within the 30 day limit, the customer will still have to prove that the car was not of satisfactory quality, which for an older higher mileage car will allow for some faults. This has not changed for decades, the only change now is that there is a definitive 30 days in which the customer can reject the car whereas previously it was within a reasonable time. In fact the new changes should be welcomed by most as it is actually in the dealers favour in many cases. I agree that the One Time only repair could cause problems, but if the dealer manages the customer expectation from the very start this shouldn't cause too many issues. This law is coming, but there is no need to be afraid of it. Get some training from a suitable trainer such as the Chartered Trading Standards Institute and you will see there is little in this new law to be afraid of.
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Mark Reeves LL.B LL.M - 03/09/2015 11:55

We are pleased that our Article has generated such debate. Inevitably, as with any new statute there will be a time-lapse between adoption and legal interpretation via court cases and, in the meantime, we can only consider what the statute actually provides. The short-term right to reject within 30 days of delivery is wholly new and represents the first statutory definition of what, to date, has been open to interpretation. The CRA 2015 refers to this consumer remedy being available where the goods ‘’do not conform to contract’; specifically where the they are in breach of statutory rights as to description (s 11), fitness for particular purpose (s 10) and satisfactory quality(s 9), etc. Under s 9(3 c) of the Act ‘satisfactory quality’ includes ‘freedom from minor defects’. It is noted that the provision is in the plural so, while it is unlikely that a single minor defect e.g. a bulb failing would allow for rejection, a number of minor defects may well. Importantly, dealers should be aware that if the consumer rejects the vehicle after 30 days then they will only receive a partial refund; the CRA 2015 makes specific reference to where ‘the goods consist of a motor vehicle’ (s 24 10 a). However, it should be noted that Glass’ or CAP value may only prove a base-line, with the ultimate refund likely to be a matter of negotiation with the consumer. We agree, that First-Time Fix will be a key focus for dealers but in this regard would ask dealers to note that: • If the consumer reports a number of faults at the same time, the opportunity to fix them counts as one repair • Occasions when the goods are with the retailer for diagnosis and investigation will not count towards the one opportunity to repair • A ‘repair’ will be deemed complete once the retailer returns the goods to the consumer as now conforming to contract. In view of this, and as outlined in the Article, we would stress the importance of dealer due diligence at handover or return of repaired vehicles. The full text of the Consumer Rights Act 2105 is available at: http://www.legislation.gov.uk/ukpga/2015/15/contents/enacted
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