Motor Trade (Consumer Protection) Bill (Hansard, 6 February 1990)

§ Mr. Gareth Wardell (Gower)

I beg to move, That leave be given to bring in a Bill to amend the law relating to the supply of unroadworthy motor vehicles and trailers and the alteration of vehicles so as to render them unroadworthy; to regulate the manner and circumstances in which vehicles may be supplied, repaired and serviced; to regulate the way in which mileage information relating to motor vehicles is recorded; and for connected purposes.

The purpose of the Bill is to protect the consumer from those motor traders who practise dishonesty, deception and fraud. This is by no means all motor traders, and I wish to say at the outset that national organisations such as the Society of Motor Manufacturers and Traders and the Vehicle Builders and Repairers Association have contributed to consultations about the Bill and support the proposed measures. Dishonesty, deception and fraud are, however, rife in the motor trade and the time is long overdue when these problems should be tackled by legislation.

Each year, 7.5 million second-hand cars are sold, half of them through the motor trade. The Institute of Trading Standards Administration reports that three out of every four of these cars will be sold in an unroadworthy condition. The law requires and consumers expect that vehicles offered for sale are safe to be on the road. The Bill does not create a new offence or impose onerous restrictions on the trade, but, as was recommended in the North report, through the amendment of section 75 of the Road Traffic Act 1988, the law, and the rights and exceptions of consumers, will he strengthened and made more effective.

Trading standards officers are responsible for consumer safety in almost everything from disposable napkins to funerals, yet, because cars are exempt from the provisions of the Consumer Protection Act 1987, the customer buying a car—probably one of the most expensive undertakings after home buying—enjoys much less protection. The Bill therefore proposes to give trading standards officers powers to inspect used cars for sale on garage forecourts to check that they are roadworthy. If a vehicle offered for sale is not roadworthy, the dealer must indicate this on the vehicle's windscreen and documentation.

These steps would mean that the motor trade and the sale of used cars would be covered by laws similar to those already operating for other goods under the Consumer Protection Act. Too often, consumers are sold cars that are potential death traps to both owners and other road users.

The provisions of the Bill will also apply to hire vehicles. In a survey of 12 hire companies in Mid Glamorgan trading standards officers found that 13 of the 16 vans and tipper trucks examined, including vans used for furniture removal and waste disposal trucks, were unroadworthy. They were so unsafe that they were banned from the county's roads. Only one vehicle had no faults at all. Companies that use hire facilities may well be unwittingly putting their employees at risk.

The Bill also tackles another problem, the sale of so-called insurance write-offs. An old horse racing practice consisted of switching two identical horses immediately before the start of the race to beat the bookies and punters. 780 It was called "ringing". The ringing of cars is now big business, and its success depends upon the present unsatisfactory arrangements for dealing with write-offs.

When a severely damaged car is sold, the vehicle registration documents go with it. If the wreck is purchased by a criminal he will then steal a car of the same year, model and colour, switch the wreck's registration, chassis and engine numbers to the stolen car and openly sell his stolen vehicle for the full market price with a "clean" registration document. That is today's ringing.

The car thief makes thousands of pounds for a few hours' work. The insurers pay out on the wreck and on the stolen car. The consumers' car insurance premiums must reflect the scale of this type of crime. The Bill proposes that when a car is assessed by insurers as a write-off the registration document is surrendered to the driver and vehicle licensing centre. This simple and basic measure, as advocated by the ACPO report of the working party on police examination of relicensed, total loss motor vehicles and the 16 consumer organisations, under the chairmanship of Sir Gordon Borrie at the Office of Fair Trading, will virtually eliminate ringing.

The Bill will also require insurers to inform the DVLC of a write-off and the reason for the write-off. At present this is a voluntary arrangement and not all insurers comply. The DVLC receives notification of well over 280,000 written-off cars a year. The Automobile Association and the Institute of Trading Standards Administration estimate that around half of these go back on the road. They will be more or less seriously damaged cars, repaired or rebuilt more or less properly. They will have had no safety check, and the purchasers will buy at full market price without knowing that, a short time ago, the cars were more or less wrecks. An AA survey in 1985 found that one in eight accident-damaged and repaired vehicles was immediately unsafe and 50 per cent. still had defects. In a Royal Automobile Club survey 3 per cent. of all the cars examined had had post-accident repairs, and 20 per cent. of the repairs had been done badly.

The DVLC computer already marks the records of cars notified as write-offs. At present this information is used by the police to check relicensed cars, although checks are minimal because of the scale of reregistrations and the lack of police manpower. The Bill proposes that a write-off will be relicensed by the DVLC only after the rebuilt vehicle has satisfactorily passed a safety test, and that the new registration document will be marked to indicate that the car has been a write-off. These proposed measures would meet both the interests of consumer safety and the right of consumers to know that the cars had been written off.

The Bill will therefore meet a fourfold consumer interest in write-offs: it will reduce theft and resale of stolen cars, protect insurance premium levels, improve car safety and allow consumers to know what they are buying.

The Bill will also give the Secretary of State powers to make laws to prevent the "clocking" of cars, where the number of miles is put back. This practice is one of the major sources of fraud, amounting to £100 million a year. One in five of the second-hand cars sold each year is likely to have had its recorded mileage doctored,. Every 1,000 miles reduced on the car clock adds £30 to the value. Unscrupulous dealers have been known to make up to £1,000 on a car sale from this business. Every year since 1980, between one in two and one in four of all convictions under the Trade Descriptions Act 1968 have been related to clocking.

781 The simplest means of preventing such fraud is for a record of the mileage to be made when the car tax is due every six or 12 months and by buyer and seller when the car changes ownership. The Office of Fair Trading has suggested that this scheme could be made to be self-financing. However, the Bill leaves the Secretary of State free to choose to adopt whichever scheme he thinks appropriate and most able to protect the public from this massive fraud.

The proposals in the Bill are supported by many organisations, and I commend it to the House.