Bid to license the motor retail industry looming as Government comes under pressure

A bid to drive the UK Government to introduce mandatory licensing of motor retailers is being prepared by consumer protection groups who are concerned about high levels of complaints in the marketplace.

But there are many questions still to be answered, such as who would oversee and enforce licensing of car sales and repairs, and how it could be funded.

The Chartered Trading Standards Institute has revealed in its 2024 manifesto that it will call on the next UK Government to legislate for specific controls on motor retail, because its members - trading standards officers - are worried about the volume of complaints, particularly concerning used cars and vehicle repairs.

It also anticipates rising levels of issues as motorists adapt to electric vehicles.

The proposal in the manifesto is that the licencing scheme would be accompanied by minimum industry standards, accreditation requirements, and mandatory Consumer Codes.

Currently the automotive industry's Consumer Codes of Practice are voluntary, and are overseen by The Motoring Ombudsman, af ully-impartial body which self-regulates the UK’s motor industry through its comprehensive CTSI approved Codes of Practice.

Its chief ombudsman and managing director Bill Fennell stopped short of explicitly backing the CTSI's proposal, but conceded to AM that the existing mechanisms to protect motorists are not available to all consumers across the sector.

"While licensing would provide a route to set minimum service standards across the industry, there remain questions as to who would operate, enforce, and pay for this model, as well as what legislation would be required to make it a reality," Fennell added.

Mandating Alternative Dispute Resolution (ADR) in the ombudsman model was considered by the Department for Business in 2022 following its findings in its Consumer Protection Study.

Fennell noted that the CTSI's manifesto covers the importance that the existing framework of Consumer Codes, ADR and Ombudsman schemes play in offering robust non-legislative routes to help consumers and businesses seek redress if they have a dispute, and outlines how these mechanisms could be simplified to improve consumer and business understanding of how to access them.

“Across the automotive sector, The Motor Ombudsman, AA Cars, Bosch Car Service, National Body Repair Association (NBRA), the RAC, and Trust My Garage all offer Codes of Practice to provide higher customer standards within the garages that are accredited to their organisations, as well as routes to independent and impartial ADR services to resolve consumer complaints.

“As an example, at The Motor Ombudsman, we have more than 7,500 businesses across the UK signed up to one or more of our four Codes of Practice, covering the manufacturer’s warranty, new and used vehicles sales, service and repair, and extended warranties, providing consumers with additional protection wherever they are in the vehicle purchase and ownership lifecycle. This is as well as accepting more than 8,500 consumer cases into our ADR service.”

He added: “Within the automotive sector, the use of Codes of Practice and ADR to provide redress for consumers is widespread within vehicle manufacturers, franchised dealers, and the more customer-centric independent garages.

"However, the levels of protection these mechanisms provide are not available to all consumers across the sector.

“While licensing would provide a route to set minimum service standards across the industry, there remain questions as to who would operate, enforce, and pay for this model, as well as what legislation would be required to make it a reality.” 

The CTSI told AM it would provide more detail in due course as it examines the extra help motorists need.

In the 12 months to October 2023 The Motoring Ombudsman was contacted by almost 63,000 consumers and was informed of almost 24,000 disputes, of which 8,251 proceeded to investigation cases. However 7,600 consumers' disputes were rejected because they concerned non-member businesses.

A spokesperson added: "It’s an area we are exploring at the moment to try and help consumers in that area. Citizens Advice consistently have used cars as the most complained about topic."

Its manifesto states that consumers are confused about how to seek redress when they have a problem, due to a combination of multiple ADR providers and gaps in redress, and do not understand the role of Ombudsmen, redress and ADR schemes.

"More needs to be done to protect consumers and to help them seek redress by improving accreditation and accountability, and simplifying the redress routes," it states.

Over the last 10 years, the second-hand car market has been one of the most complained about industry sectors in the UK. Rogue dealers who sell cheap, clocked or unroadworthy cars often impact the most financially vulnerable consumers. NTS supported Trading Standards cross-regional activities to disrupt the most complained about used car traders. Over 4 years this has prevented £1.9 million of consumer detriment.