Code of Practice for the Retail Motor Industry

A Code of Practice, drawn up by the Retail Motor Industry Federation and the Scottish Motor Trade Association in consultation with the Office of Fair Trading ("OFT").

Introduction
This Code of Practice ("the Code") is based upon the code that was originally drawn up in 1976 by the Society of Motor Manufacturers and Traders ("SMMT"), the Retail Motor Industry Federation ("RMI") (formerly Motor Agents Association) and the Scottish Motor Trade Association ("SMTA") in consultation with the Director General of Fair Trading. It has been revised and improved by the RMI and the SMTA ("trade associations") in consultation with the OFT and governs the conduct of dealers or repairers in relation to the supply of new and used cars, fuel, parts and accessories and car servicing and repair. It embodies principles which have been observed by the majority of the retail motor industry for many years.

The principles set out are not intended to interpret, qualify or supplant the law of the land and are not intended to be applied to business sales.

A condition of membership of the RMI or the SMTA is the acceptance of this Code in its entirety. Consumers who feel dissatisfied with the treatment they have received from members will be able to submit their grievance to the conciliation and advisory service operated by the relevant trade association.

It should not be overlooked that consumers also have their part to play. It is only by cooperating fully with those who make, sell and service cars that consumers can get the maximum benefit from their purchases. In particular, by maintaining their cars in accordance with the manufacturer's instructions; by observing any warnings given in the handbook; and by giving as much information as possible to anyone servicing or repairing it, they can ensure that they get the best possible use out of their cars and any problems are reduced to a minimum.

Throughout the Code:

The term "manufacturer" shall include concessionaire or importer. The term "Dealer" shall include retail dealer or distributor or supplier of goods or services, whether or not franchised by a manufacturer. The term "car" shall include a mechanically propelled vehicle except a vehicle - i) constructed in such a way that it is primarily suited for transporting goods of any sort, or ii) of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle; unless such vehicles detailed in i) and ii) above are sold as business to consumer transactions. References to the singular shall include references to the plural and vice versa.

General
1.1 Members of the RMI or the SMTA ("Members") must be aware of and comply with the terms of this Code and all applicable laws and regulations that relate to consumers. Members must ensure that their staff shall comply with the spirit as well as the letter of this Code and such laws and regulations relating to consumers including, but not limited to, those relating to Sale of Goods, Supply of Services, Unfair Contract Terms, Trade Descriptions and Consumer Protection. Those Members who engage in credit brokerage must comply with the provisions of the Consumer Credit Act and follow the relevant guidance issued by the OFT.

1.2 Members will deal with consumers fairly, courteously and in accordance with good business practice. This shall include, but not be limited to, the avoidance of high pressure selling, sensitive treatment of vulnerable consumers, full written information to be provided to consumers on request and the provision of clear and accurate information on the availability and price of linked goods such as routine servicing, extended warranties etc.

1.3 Order forms and any other pre-contractual information are intended to help both parties to the contract by clarifying the terms and conditions on which business is to be done. Such terms and conditions must be fair and reasonable and, as with all documents, be set out clearly, in plain English and legible. Order forms must include statements covering the circumstances under which the order can be cancelled (including where delivery is delayed), deposits and pre-payments can be refunded fully and speedily in the event that the Member is unable to deliver the promised goods/services and delivery/completion dates. Members must ensure that an appropriate protection mechanism is in place such as a separate bank account to protect consumers' deposits and pre-payments in case the Member goes into receivership or suffers a similar event. Where delays in delivery subsequently prove unavoidable, consumers must be given as much advance notice as possible. Consumers can then negotiate alternative delivery/completion arrangements if they wish to do so.

1.4 Members will ensure appropriate processes are in place which ensure quality checks on work as specified in the RMI/SMTA compliance regime issued to Members from time to time.

1.5 Members will have in place a written training policy to ensure that staff are competent to complete the work that they undertake.

2 Warranties
2.1 Warranties are a simple and straightforward way for consumers to have faults that are covered by the warranty appearing within a certain period, or before the new or used car has done a certain mileage, corrected at little or no cost to consumers. It is important to note, however, that consumers still have a right to redress against the seller of a car even while the car is under a manufacturer's or other warranty.

2.2 Warranties are governed by the Sale and Supply of Goods to Consumers Regulations 2002. Members are required to ensure that the warranty sets out in plain English the contents of the warranty and the details for making a claim. The warranty must not purport to take away or diminish any rights which consumers would otherwise enjoy in law. The document must also include a statement advising consumers that the warranty is in addition to their statutory or common law rights.

2.3 The key elements of warranties and, if applicable, any free extensions to warranties must be drawn to the attention of consumers. This includes details of what is and is not covered and the geographical scope of the warranties.

2.4 Any relevant document published by the warranty provider must be handed over. The consumer must be advised of what type of warranty is being provided, for example, manufacturer's, free extended manufacturer's/dealer's, insurance backed used car or member's own warranty. The consumer must be informed of the identity of the warranty provider and the address to which claims may be directed. The different types of warranty and any significant differences between them should be explained to consumers as appropriate.

2.5 The consumer must be informed when there are limitations on where the car can be serviced in order to maintain the warranty, and where there are no such restrictions on the garage that can be used, conditions that need to be followed for the warranty to remain valid.

2.6 Members will give advice to consumers as to who they should address a claim if they have a problem regarding defective parts and accessories not covered by the manufacturer's warranty.

2.7 Members will ensure that warranty work is carried out promptly and that completion dates are made clear to consumers before any work has commenced.

3 New Car Sales
3.1 Members are reminded that in sales of goods to consumers they are responsible under the Sale of Goods Act 1979 for ensuring that the goods are of satisfactory quality and fit for the purpose for which they are required. Statements whether oral or in writing which are in apparent conflict with this principle must be avoided.

3.2 Where Members are required by the manufacturer to carry out a Pre-Delivery Inspection ("PDI"), the Member shall carry out such PDI properly and in accordance with the manufacturer's recommendations. Where PDI check lists are provided by the manufacturer, the Member shall provide a copy of the properly completed check list to consumers.

3.3 The car must be delivered in a condition which is to the manufacturer's standard. Each car must conform fully to all legislation affecting its construction, use and maintenance. This paragraph does not affect any legal responsibilities which may be placed on manufacturers and users to ensure this.

3.4 The benefit and limitations of any treatment over and above that already provided by the manufacturer which is recommended by the Member in order to inhibit the growth of rust or other corrosion must be explained to consumers.

3.5 Order forms must contain details of all charges additional to the car price so that consumers may understand clearly the total price they have to pay to put the car on the road.

3.6 Members must ensure that the manufacturer's handbook relating to the model of car being sold is available to consumers at the time of sale of the car and for a reasonable length of time thereafter.

4 Used Car Sales
4.1 Used cars sold to consumers must conform to legislation affecting the construction and use of cars and should, where appropriate, be accompanied by a current Department for Transport Test (MOT) Certificate.

4.2 Members must bear in mind that sales of used cars are subject to the Sale of Goods Act 1979 and attention is specifically drawn to the conditions of satisfactory quality and fitness for purpose. If, however, defects are specifically brought to the attention of consumers or consumers examine the car before a contract is made there is no condition of satisfactory quality as regards those specific defects or ones that examination ought to reveal. Members should therefore reveal defects on an approved checklist (see 4.5 below). The format of the checklist is determined and/or approved by the RMI or SMTA as appropriate. Members should provide reasonable facilities to enable prospective consumers or their nominees to carry out an examination of the car prior to sale, in order that any defects which ought to be revealed at the time of sale are made known to both parties.

4.3 If a printed guarantee or warranty is not used, then any specific promises which the Member is willing to make in relation to the used car should be set out in writing and be in plain and intelligible language.

4.4 Used cars must be offered for sale in a roadworthy condition. The Member will carry out a pre-sales inspection in accordance with a checklist approved by the RMI or SMTA. The checklist must be completed and either prominently displayed on the car or shown to a prospective purchaser of the car before it is sold. A copy of the checklist shall be given to the purchaser on completion of the sale.

4.5 All descriptions, whether used in advertisements or in negotiations regarding the sale of used cars should be honest, truthful and not misleading. Terms which are likely to be misunderstood by consumers or which are not capable of exact definition must be avoided.

4.6 Relevant written information provided by previous owners regarding the history of cars must be passed on to consumers. This may include service records, repair invoices, inspection reports, handbooks and warranties, as applicable.

4.7 Reasonable steps will be taken to verify the recorded mileage of a used car and Members will use reasonable endeavors to obtain a signed statement from the previous owner as to the car's mileage. Members must pass on any known facts about an odometer reading to prospective consumers.

4.8 Unless the Member is satisfied that the quoted mileage of a used car is accurate, such mileage must not be quoted in advertisements, discussions or negotiations or in any documents related to the supply of the used car. Where cars' mileage cannot be verified, consumers will be informed. The law requires that any disclaimer used must be as bold, precise and compelling as the car's mileage reading itself and as effectively brought to the prospective consumer's attention.

4.9 Finance on Part Exchanges
Members are obliged to make reasonable efforts to ensure they give good title (eg by obtaining a statement from a finance checking house) by checking and discharging existing finance on cars they sell. Also, whenever possible, Members will check whether any outstanding recalls exist on a car.

5 Replacement Parts, Accessories and Fuel
5.1 Members must bear in mind that in sales of goods to consumers they are responsible under the Sale of Goods Act 1979 that the goods are of satisfactory quality and fit for the purpose for which they are required. Statements, whether oral or in writing, in apparent conflict with this principal must be avoided.

5.2 Without prejudice to the general obligation to always give clear indications of price as detailed in Clause 7.5 below, whenever goods are offered for sale and an extra charge is payable for certain non-cash forms of payment (credit cards etc) a clear indication of cash price must be available to consumers.

5.3 All descriptions, whether used in advertisements or in negotiations regarding the sale of replacement parts, accessories and fuel should be honest, truthful and not misleading. Terms must not be used in advertisements if they are likely to be misunderstood by consumers or if they are not capable of exact definition.

5.4 With offers of promotions any restrictions which are attached to sales other than cash sales must be clearly stated.

5.5 A Member must not display any notices or make any statements which might mislead consumers about their legal rights in relation to the purchase of faulty goods.

6 Repairs and Servicing
(excluding work carried out under a Car Manufacturer's warranty)
6.1 Members must bear in mind that when supplying parts or accessories in connection with repairs or servicing work for consumers, they have a similar responsibility to that which exists under a contract for the sale of goods to ensure that the goods are of satisfactory quality and fit for the purpose for which they are required and that work is performed with reasonable care and skill. Members shall not accept work for which they, or their sub-contractors, do not have the requisite expertise or equipment.

6.2 Members will provide at least an estimate of the cost of labour and materials for repairs and servicing. A firm quotation will be offered wherever possible. It must be made clear to consumers whether an estimate or quotation is being made. All estimates and quotations shall be inclusive of VAT. Quotations must always be in writing identifying the Member. If requested, estimates will be in writing. It should be remembered that an estimate is a considered approximation of the likely cost involved whereas a quotation constitutes a firm price for which the work will be done. If a charge is to be made for the estimate or quotation this must be made known to consumers before their instructions are accepted. Any dismantling costs which are necessary to arrive at such estimates or quotations must be notified to consumers in advance on the clear understanding whether or not dismantling costs are to be charged on an estimate or quotation which is refused. If, during the progress of any work, it appears that the estimate will be exceeded by a significant amount, then consumers must be notified and asked for permission to continue with the work.

6.3 Parts replaced during service or repair will be offered to consumers unless a warranty claim is involved or unless the parts have to be submitted to the supplier because replacement parts are being supplied on an exchange basis.

6.4 Invoices must be clearly written or typed and give full details of the work carried out and materials used. The amount and rate of VAT must be clearly indicated. Dates and recorded mileages must always be noted where applicable.

6.5 Members must exercise adequate care in protecting consumers' property while it is in their custody, and must not seek by disclaimers to avoid their legal liability for damage or loss. Members must carry adequate insurance to cover their legal liability and should strongly advise consumers to remove any items of value not related to the car.

6.6 Repairs must be guaranteed against failure due to workmanship for a specific mileage or time period which must be stated on the invoice together with a statement confirming that any such guarantee does not affect consumer's existing legal rights.

6.7 Members must notify consumers of any methods of payment that are not accepted before the work is accepted.

6.8 When it is necessary to sub-contract work, the Member will be responsible for the quality of the sub-contractors' work. Any estimate given to consumers must include the sub-contracted work and in the event of any increase in charge for the work, the principles in paragraph 6.2 must apply.

6.9 Members must make it clear whether or not servicing will be carried out in accordance with the appropriate manufacturer's recommended service schedule.

6.10 The Member must advise consumers of any material defects which become apparent while any servicing or repair work is being carried out.

7 Advertising
7.1 All advertising by Members must comply with the British Codes of Advertising and Sales Promotion, or any other code of advertising or regulations that may be relevant (e.g. Independent Television Commission (ITC), Radio Authority or Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS), Control of Misleading Advertisement Regulations).

7.2 Advertisements must not contain any references to guarantees or warranties which would take away or diminish any rights of consumers nor should they be worded as to be understood by consumers as doing so.

7.3 Advertisements must not contain the words "guarantee" or "warranty" unless the full terms of such undertakings as well as the remedial action open to consumers are either clearly set out in the advertisement or are available to consumers in writing at the point of sale or with the product.

7.4 Claims and descriptions in advertisements should not be misleading. In particular any comparison with other models of different manufacturers should conform to all legal requirements governing comparative advertising including being based on a similar set of criteria and not being presented in such a way as to confuse or mislead consumers.

7.5 A price quoted must be a price at which consumers can buy the goods. Members must therefore quote prices for cars, whether in advertisements or in showrooms, inclusive of the price of any extras known to be fitted to the car together with the appropriate VAT and Car Tax.

7.6 In the description of used cars, terms likely to be misunderstood by consumers or which are not capable of exact definition must be avoided. For example, if the word "reconditioned" is used, the nature of the reconditioning must be carefully explained.

7.7 In the description of a used car, any year must be either:
(a) the year of first use or
(b) the year of the first registration, or
(c) the last year that the car complied with the manufacturer's specification of a model sold as new during that calendar year, whichever is the earliest.

7.8 Where an advertisement quotes the price of one model in any model range but depicts another, the actual price of that other model must also be shown.

7.9 Where a manufacturer advertises a rust-proofing process, information about the process and its limitations must be made freely available.

8 Handling Complaints
8.1 Members must ensure that effective and immediate action is taken with a view to achieving a just and prompt settlement of a complaint. To this end there will be, from the point of view of consumers, an easily identifiable and accessible procedure for the reception and handling of complaints. This must include details of how to complain, who to complain to, reasonable timescales for dealing with the complaint and details of the conciliation and independent arbitration procedures. This procedure must be understood by all relevant staff. A written complaint must be acknowledged within seven days and a substantive response sent within twenty one days of receipt. The same time scales will apply to the RMI and SMTA when dealing with written complaints from consumers.

8.2 When complaints are raised through a third party (e.g. the Automobile Association, the Royal Automobile Club, the Trading Standards services or a Citizens Advice Bureau), full cooperation must be given to that body although, if appropriate under the circumstances, reasonable efforts should be made to re-establish direct communication with complaining consumers and to reach a satisfactory settlement.

8.3 In the event that a complaint is not resolved, Members must make it clear to consumers that they have a right to refer the complaint to the appropriate trade association for conciliation.

8.4 Members will give assistance to the trade association concerned while it is investigating a complaint.

8.5 Where conciliation has failed to resolve a dispute the RMI and the SMTA have agreed to co-operate in the operation of low cost independent arbitration agreements which will be through an Independent Panel of Arbitrators. Details of the arbitration arrangements are set out in the Appendix to this Code. Consumers must always be advised that they have the option of taking a claim to the Courts.

8.6 The award of the arbitrator is enforceable in law on all parties.

9 Monitoring and Disciplinary Procedure
9.1 Members are obliged to fully cooperate and comply with the RMI's National Conciliation Service and Arbitration procedure and this monitoring and disciplinary procedure and the compliance arrangements detailed within this section of the Code.

9.2 As subscribers to the Code, Members must ensure by the clear display of appropriate logos, pamphlets or other means as determined by the trade associations that consumers are informed of Members' adherence to the Code and basic details of the Code. Copies of the full Code shall be made available to consumers on request.

9.3 The RMI and SMTA shall ensure Members' compliance with the Code by implementing an effective compliance regime as determined from time to time by the RMI and SMTA in conjunction with an independent Scrutiny Committee. The compliance regime shall, for example, contain elements such as periodic visits to Members' premises, mystery shopping exercises, analysis of consumer complaints and consumer survey programmes.

9.4 Incidences of minor non-compliance will prompt appropriate advice. More serious incidences will result in a written warning detailing what corrective action must be taken and by when. If appropriate, such serious incidences shall also result in a follow up compliance visit or mystery shop, the cost of which shall be born by the Member. A very serious breach or persistent minor breaches of the Code will result in a Member being called before an Independent Disciplinary Committee which may, if it sees fit, expel the Member from participation in the Code and membership of the appropriate trade association. The Member has the right to be accompanied and/or represented at the hearing. There is a right of appeal. In the event of expulsion, the Member may not re-apply for membership before two years has elapsed and the cause of the expulsion been properly addressed.

9.5 The Independent Disciplinary Committee shall comprise five people drawn from a pool of at least ten. It shall be independently chaired and include two independent and two other members from within the retail motor industry. Any appeals will be heard by three members from the pool that were not involved in the initial hearing and will comprise of an independent chair and one other independent member and a member from within the motor industry.

9.6 The independent Scrutiny Committee shall oversee the monitoring activities of the trade associations and make recommendations as it sees fit. It shall also produce an annual report on its findings which it shall make available to the trade associations for inclusion in their respective annual reports and to the OFT.

9.7 Members must maintain a record of consumer complaints relating to any of the provisions of the Code and must take action based on this information to improve their service to consumers. Complaint records must be kept on file for a minimum period of 12 months after resolution and made available to the appropriate trade association on request.

9.8 The RMI and the SMTA will analyse the consumer complaints received under the Code and matters referred to them for conciliation or arbitration. The results of the analysis will be made available to the Scrutiny Committee to assist it with its duties referred to in 9.5 above.

9.9 In the event that a Member is prosecuted or becomes aware of the likelihood that it will be prosecuted as a result of a matter connected with its business activities, the Member must immediately notify the RMI or SMTA as appropriate and provide relevant details.

Appendix:
Complaints and Arbitration
1 Consumers who have a complaint about the quality of the goods or service to their cars should in the first place and at the earliest opportunity refer it to the Member concerned.

2 The complaint, preferably in writing, should be addressed to a senior executive, a director, a partner, the proprietor or an executive especially nominated to deal with complaints. The Member must acknowledge receipt of the complaint within seven days and send a substantive response within twenty one days of receipt of the complaint.

3 If the complaint relates to warranty on a new car and the Member is unable to resolve the matter, consumers must have the situation properly explained to them and be referred to the manufacturer concerned.

4 If attempts to reach a satisfactory conclusion fail, consumers have a right to refer their complaint to the Member's appropriate trade association. Any such complaint must be in writing.

(a) if the complaint lies against a Member who is situated in any part of
the United Kingdom except Scotland the address is: The National Conciliation Service,
Retail Motor Industry Federation Ltd, 9 North Street, Rugby CV21 2AB.

(b) if the complaint lies against a Member who is situated in Scotland, the address is: Consumer Complaints Service, Scottish Motor Trade Association Ltd, Palmerston House, 10 The Loan, South Queensferry, EH30 9NS.

5 All complaints referred to the appropriate trade association within a reasonable time of the cause for complaint arising will be considered.

6 If the trade association is unable to resolve a complaint, the Member will agree to go to arbitration. Consumers must be informed how the arbitration procedure works, that the result is binding on both parties and that they will need to enter into a binding arbitration arrangement. Consumers must be advised that they do not have to follow this procedure and are free to pursue their rights through the Courts if they prefer.

7 Parties to arbitration will be asked to pay any applicable registration fee. When the Arbitrator makes his/her award, he/she will determine whether the registration fee should be returned to the successful party.

8 The parties will also be asked to sign an application for arbitration which will be sent, together with the registration fee, to: The Independent Panel of Arbitrators, c/o Retail Motor Industry Federation Ltd, 9 North Street, Rugby CV21 2AB.

9 In order to keep costs as low as possible, the arbitration will normally rely solely on documents. In these cases, none of the parties to the dispute may be present nor may they be represented by any other person.

10 The relevant trade association will submit to the Independent Panel of Arbitrators all the documentary evidence in its possession that it considers relevant to the case. The Independent Panel of Arbitrators will advise the parties to the dispute of the written evidence they have available on which it will base its judgment and invite the parties to submit any further evidence which it considers relevant.

11 The Chairman of the Independent Panel of Arbitrators will appoint a single arbitrator ("the Arbitrator") and will make all the necessary arrangements for the arbitration to be conducted as speedily as possible.

12 If appropriate under the circumstances, the Arbitrator may conduct an oral arbitration hearing and the parties may then attend to present their evidence. Legal representation may only be employed if the Arbitrator so directs.

13 The Arbitrator has the power to direct any party to provide him/her and the other party(ies) any additional documents or information he/she considers to be relevant to the matter under dispute.

14 The award of the Arbitrator will be published in writing to the parties to the dispute and to the relevant trade association.

15 The award of the Arbitrator is binding on the parties and enforceable in the Courts.

Retail Motor Industry Federation Ltd, 201 Great Portland Street, London W1W 5AB.

The Scottish Motor Trade Association Ltd, Palmerston House, 10 The Loan, South Queensferry, EH30 9NS.