Trading standards advice for motor traders

Buying a car is an important event – whether it’s your dream car, your first car, or a car for work.
 
Nobody wants to get ripped off. As a motor trader, you will be keen to banish the stereotype of the ‘dodgy second-hand car salesman’. You’ll also want to avoid breaking the law by complying with trading standards. But to do that, what rules and codes should you be aware of?
 
In this article, we’ll explore what you need to know about trading standards, how to keep customers happy, and the importance of insurance for motor trade businesses.
 

Understanding Trading Standards

Trading Standards is a Government body that protects consumers from rogue traders or scammers.

You can be reported to Trading Standards if a customer thinks you acted unfairly or broke the law. They can then investigate you and take you to court if necessary.
 
For consumers, the existence of trading standards is vital. It helps them hold sellers to account and get a fair deal. It also makes sure businesses are operating fairly, in good faith and within the rules.
 
However, it can also be a positive tool for businesses. For one, it could support you if you buy unsatisfactory goods or services for your motor trade business. When an honest and reputable company deals with a business that breaches trading standards law, it just puts them at an unfair disadvantage.

As a motor trader, trading standards can also give customers confidence in your business. By using trading standards and consumer regulations as your guide, you can set up business practices that not only help you prevent problems with customers, it can proactively encourage good practices that help build your reputation as a motor trader.
 
It could even make the difference for customers who, in a world where online purchases and private sellers are so popular, might be considering buying a car privately instead. The Government says consumers buy from private sellers at their own risk, as they don’t have the same legal rights as when they buy from a motor trade professional. Given the necessity of a car in a person’s life, having these protections is a big deal.

What if you don’t comply?

Breaching trading standards laws can have serious repercussions for your business, as well as you personally.
 
In many cases, these breaches will be criminal offences, so you could find yourself in court being prosecuted. You could end up with a criminal record, a fine or even jail time, with your reputation as a trader tarnished. Also, you may have to pay compensation to a victim, or cover the costs of the investigation.
 
In some cases, you could be banned from trading altogether. This wouldn’t be out of the question as a motor trader, given how important it is to provide vehicles that are roadworthy and safe. Failing to do this directly puts lives at risk.
 
This was the outcome for two traders in Birmingham in 2020. When a Trading Standards investigation discovered they were selling unsafe vehicles, they were banned from trading for a total of 14 years.
 

What trading standards laws affect motor businesses?

Here, we will explore some of the laws that you have an obligation to comply with as a motor trader.

The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) were brought in to ban practices by traders which are unfair for consumers. As a trader, this means it’s illegal to mislead your customers, such as false advertising, or fail to tell them important facts about a sale.

For example, this could be if you sell a vehicle and don’t tell the customer it was previously damaged in an accident. It doesn’t matter where you give information to the customer – it could be in person, on the phone or in any public information you display, such as posters in the showroom or on your website – if it’s false or misleading, you’re in breach of CPRs.

CPR rules are quite broad and so cover a lot of situations for motor traders, for example if you supply a clocked vehicle, or even just advertise about supplying it. You will also be in breach of CPRs if you act aggressively, or use intimidation and coercion as a sales tactic towards a customer.

The Consumer Rights Act 2015 (CRA) covers the sale of goods to consumers, including new and used cars. Under the CRA, when you sell a car to a customer, they are entitled to a vehicle of ‘satisfactory quality’. For new vehicles, this obviously means the customer can expect a car in perfect working order.

For used cars, the buyer still is still protected. The vehicle they buy should be of a standard expected by a reasonable person, which will be based on various factors. These include, among others, the age of the vehicle, the price versus its worth, history and mileage, what it will be used for, and the appearance or finish.

While it means naturally there are more grey areas with second-hand cars, a customer can still expect to be treated reasonably. For example, a customer may have to accept that the car they’re choosing to buy is old with high mileage, but in return they are still entitled to expect the car is roadworthy, safe and reliable in fair relation to its age and price.

As a trader, you will be liable for any faults with a vehicle that were there when you sold it. However, there are instances where you won’t be liable, for example fair wear and tear in a second-hand car. Also, if a customer inspects the car and doesn’t notice a minor aesthetic defect, for example a small scratch, you are not liable for this after they purchase.

The CRA also gives buyers the power to request a full refund if you didn’t meet their consumer rights when you sold them a vehicle, whether that’s being of satisfactory quality or being fit for the purpose outlined when bought.

For 30 days after the sale, the buyer has what is known as a ‘short-term right to reject’. As an example, if you sell a car to a customer having told them it had one owner, then they discover two weeks later it actually had several owners, you have breached their consumer rights and they can request a full refund. This starts on the day you give the customer the vehicle and doesn’t include any days it has to come back for repairs.

When a refund is requested and agreed, you then have 14 days to give the customer their money back.

If a fault comes to light after 30 days, the customer will instead be able to request repair or replacement. You get one opportunity to rectify the problem with their car so that you’re no longer breaching the CRA. Any repair or replacement must be at no extra cost and cause no significant inconvenience. If the issue isn’t resolved after that, the customer can ask for a refund.

These rules all apply when selling in person at your dealership. The only instance where a customer would be able to ask for a refund sooner would be if you sell them a car online. Under The Consumer Contracts Regulations 2013, if a customer buys a car from you online or over the phone, it counts as an ‘off-premises’ or ‘distance’ sale. When this happens, a customer has 14 days after the car has been delivered to cancel the order and doesn’t have to provide a reason for doing so.

This extends to a full year if you or your staff don’t inform the customer of their 14-day right to cancel.

Also, be careful when it transpires you have an unroadworthy vehicle on your hands. Under The Road Traffic Act 1988, selling or supplying an unroadworthy vehicle, or even offering to do so, is illegal. You should make sure any unsafe vehicles are removed from your forecourt as soon as possible as just having them there could be a criminal offence.
 

Codes of Practice to be aware of

Approved by Trading Standards, Codes of Practice have been created by The Motor Ombudsman to help them enforce the rules and give your customers confidence in your cars.

For motor traders, the most relevant is the Vehicle Sales Code. By adhering to this Code, whether you sell new or used vehicles, you are confirming that:

●       Advertising for your products will be clear, fair and honest.
●       All information you provide about new or used vehicles will be clear, honest and help the customer make an informed choice.
●       Your staff will provide a positive and useful sales experience and will only offer appropriate warranty or finance options.
●       The vehicle, when purchased, will be supplied at the expected standard.
●       You will continue to support the customer if needed after purchase, including handling complaints in the right manner.

Your business can become accredited by the Motor Industry Code of Practice, which can be very beneficial. It’s a way to reassure customers that you provide the highest levels of quality and customer service.

You’ll be able to highlight this by displaying the logo of the Chartered Trading Standards Institute (CTSI) in your showroom or forecourt, and on your website, to give visitors extra confidence as they look around.

It’s also important to know about the New Cars Code. It outlines the practices adhered to by any car manufacturer that has signed up, which in the UK accounts for 99% of all new cars and includes the likes of Jaguar, Audi, Porsche and most others making cars in the UK.

In the New Cars Code, you’ll find out about the manufacturer’s warranties drawn up for new cars, and the knock-on effect this might have to your requirements as a dealer. It also highlights the car maker’s commitment to supplying you with vehicles that meet the expected quality and standard.

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How to meet trading standards

When it comes to complying with trading standards laws, like most things in life, honesty is always the best policy.

If you act in good faith and be honest with customers at all times, you find complying with trading standards laws a much easier process as these regulations simply exist to stop consumers being defrauded.

Business Companion, a Government-backed service, says motor traders should carry out all necessary precautions, checks and due diligence before even considering putting a car up for sale. By being thorough at the beginning, you can have confidence the information you give your customers is reliable and won’t cause problems down the line.

This might include MOT history checks to ensure the car is roadworthy, and contacting anybody who has serviced the vehicle in the past to double check the accuracy of the vehicle's history. When you do these checks, make sure you add this to your records, too.

It’s also important that your staff are properly trained in how to make sales without misleading customers. Anyone in your business, including yourself and any staff member, can breach CPR laws, so you must make sure they have the training and knowledge to avoid this outcome.

Meanwhile, it’s worth thinking about elements you can add to your business that can help keep a customer happy when there are disputes. They don’t have to be out of the ordinary, for example a standard courtesy car offering. By being able to offer this to customers who have found a fault soon after driving, it could be the thing that prevents having to refund that sale while keeping the customer happy.
 

Motor trade insurance that suits your business

As you comply with trading standards laws, you must also meet all the other demands, from security to making enough sales and more. At Insurance Choice Commercial, we understand this is your livelihood and needs to be protected with appropriate motor trade insurance.

For 20 years, we have arranged specialist motor trade insurance to suit individual needs. This includes cover for full and part-time traders, and collection and delivery cover.

Get a quote for motor trade insurance today.

Policy benefits, features and discounts offered may very between insurance schemes or cover selected and are subject to underwriting criteria. Information contained within this article is accurate at the time of publishing but may be subject to change.