Business, Innovation and SkillsWritten evidence submitted by the Independent Garage Association

1. Introduction

1.1 The Independent Garage Association (IGA) welcomes the opportunity to comment on the Draft Consumer Rights Bill (the Bill).

1.2 The IGA is responding on its own behalf and for its sister association the National Association of Bodyshops (NAB). Whilst we welcome this sign of renewed commitment from the Government with regards to protecting consumer rights, we are worried that parts of the Draft Bill focus too single-mindedly on the rights of the consumer at the expense of the rights of industry.

1.3 The IGA would welcome the opportunity to appear at any oral evidence sessions held by the BIS Select Committee.

2. Background

2.1 The IGA is the largest and most prominent representative body in the independent garage sector, which is made up of approximately 20,000 businesses. It is the voice of the industry in the UK and in Europe on legislative and regulatory issues.

2.2 The IGA exists to drive up standards, reduce consumer detriment and challenge poor trading practices ensuring the stability of the independent sector by providing consumers with a choice of quality local garages which are independent of the manufacturer’s franchised networks.

2.3 Independent garages are often smaller entities which enjoy a close and personal relationship with customers. As such the IGA is in the unique position of being a trade body representing the interests of its members while at the same time being aligned with the values and needs of consumers through the Trust My Garage brand. This was introduced in 2010 to make the independent automotive sector a safer and fairer place for consumers.

3. Consumer Law Reforms

3.1 As prospective sponsors of a Trading Standards Institute Consumer Code, demonstrating our industry’s desire to self-regulate to reduce consumer detriment, we are generally supportive of the changes to consumer law contained in the Draft Consumer Bill of Rights. We agree that many of the changes are sensible and back up the independent garage industry’s own efforts in achieving the goal of improving the overall consumer landscape.

3.2 However, we do have some comments and concerns with the Bill, primarily with the proposed legislation in respect to goods which are likely to impose significant additional cost on independent garages, particularly as these changes could allow some consumers to act in an aggressive or vexatious way.

3.3 Goods—Right to Reject:

3.31The concept of codifying early rejection is a beneficial concept to both consumers and traders. However, the right balance needs to be struck. The issue with goods such as motor vehicles is that time of ownership does not generally reflect usage. In the retail motor trade distance travelled is often more important than time of ownership and the IGA is worried that introducing a fixed time period for early rejection leaves no flexibility for judging individual situations. For example, a customer may have had the car 30 days but only travelled 10 miles, whilst another customer may have only had the car a week and travelled 1500 miles. The Draft Bill in its current form does not account for this potential difference and, if enacted, could unfairly penalise the independent garage industry.

3.32A further issue with the changes in “rejection right” is the extension in the draft legislation that allows a consumer to accept the offer to have a fault repaired successfully whilst still retaining the right to reject the vehicle within the 30 day period, even if there were no further problems with the vehicle following the repair. This, coupled with the absence of the “right to deduct” an amount for usage of the vehicle during the initial 30 days of ownership, has the potential for significant detriment to the retail motor trade.

3.33Where the “right to reject” might cause specific problems for smaller independent garage retailers is in relation to part exchange agreements. If the Draft Bill is enacted in its current form garages would be obliged to store part exchanged vehicles for the entire early cancellation period before they can be sold on, just in case the consumer exercises their right to reject the vehicle purchased. This is highly impractical and would create significant revenue and cash flow problems for the garage involved.

3.4 Goods—Right to Replacement:

3.41We are concerned that the proposed wording of section 23 of the legislation has removed detail that prevents consumers demanding a repair or replacement where it is disproportionate to have a reduction in price or an order cancelled. The wording to section 23(3)b is open to interpretation, particularly the use of the term “those other remedies,” which may be interpreted in two ways:

Either, all remedies open to the consumer including cancellation and reduction in price.

Or, that this refers only to repair or replacement.

The latter has the potential to result in restricting the Court’s opinion if the consumer will not accept a price reduction. We would prefer wording that could be given a wider interpretation.

3.42We also note that the section makes reference to the consumer requiring the trade to repair or replace. Whilst it can be implied that the consumer has to come back to the original garage, the wording is sufficiently close to the current legislation to suggest that this would not be a requirement. Given the added burdens on the motor trade as a result of new consumer rights detailed in the legislation, we feel it would be a reasonable requirement to include that the right to obtain the cost from an alternative repairer should only be recoverable in the event of the original garage in question refusing to comply.

3.5 Goods—Right to Reduction in price or Final Right to Reject:

3.51Whilst sections 23(3) (b) and (c) are commensurate with the current application of the law in respect to reduction and final right to reject, section 23 (3) (9a) is a significant addition. Current best practice when a fault occurs is to initially repair then, if not successful, replace on a like for like basis or cancel. Whilst the law does not define how many repairs are appropriate there is a general acceptance that more than one can occur depending on the severity of the failure.

3.52If the legislation is enacted in the proposed form any goods sold by a trader will get the right to either one attempt to repair or one replacement. Whilst this is appropriate for many goods sold, we believe it is not for used motor vehicles and their associated parts. Motor vehicles by their nature are complex and as such give potential problems when repairing. Not only can faults be hard to diagnose and isolate, it is not unusual for the repair of one fault to trigger another. If the one repair rule was to be introduced this could lead to significant additional cost for motor repairers as they take precautionary measures to ensure the one repair is sufficient to avoid triggering a cancellation. This is likely to include replacement of parts just in case they may be part of the fault’s cause or even make unnecessary repairs to decrease the risk of future faults occurring.

4. ServicesInformation about the Trader or Service to be Binding

4.1 We have some concern about section 52 of the Bill, which proposes that anything spoken or written to the consumer by or on behalf of the garage will become incorporated into the contractual agreement with the consumer. In practice this could mean that garages become bound to statements or descriptions made by a third party, potentially without their knowledge.

4.2 An example of this could be if a consumer sees an advert by a garage for a 48,000 miles service, indicating that this is the standard service for the particular vehicle. The customer may then approach another garage expecting the identical level of service, without referencing the advert to the garage. Upon discovering the service is not identical, the risk is that the consumer can then insist that the garage is contractually obliged to carry out further repair work. Although we would hope that this would be unlikely, we are concerned by parts of section 51 of the legislation which enforces the lack of requirement for traders to be aware of any description or statements before being bound by such terms. We would therefore suggest that perhaps the wording could be modified to include only statements made by the trader themselves.

5. Conclusion

5.1 The proposed Draft Consumer Bill of Rights incorporates much of current consumer law, but we are concerned that there are a number of major changes that will have significant impact on the independent garage sector. The Bill appears to push the balance of the relationship between consumers and traders significantly in the favour of consumers, leaving traders with few protections against consumer-related problems.

5.2 We are particularly concerned that some of the changes in respect to goods such as “right to a replacement” and “cancellation” will encourage malicious and vexatious claims. It is also likely to push the cost of business upwards as the trade becomes more cautious with consumers. This in turn could actually lead to consumers getting far less value from goods and services as the cost of these increases to cover the additional costs to business as well as traders taking a less pragmatic view to resolving customers problems. With regard to the independent garage sector, we do not believe the assertion that the Bill will promote trade with consumers and certainly any increase is likely to be lost due to the additional costs of working under new rules.

5.3 The Bill does not appear to make any reference to a consumer’s right to have a new vehicle (under manufacturer warranty) serviced or repaired at an independent garage of his or her choice. This is an important (if automotive specific) right for consumers and hinges on the provision of technical data from the vehicle manufacturer.

5.4 Provision of this data to the independent sector is enshrined in European legislation although there is currently a degree of consumer detriment present as vehicle manufacturers are still not fully complying with the law. Including a reference to this in the Bill would strengthen the consumer’s position by ensuring that the vehicle manufacturers become and remain compliant.

23 August 2013

Prepared 20th December 2013