Consumer Rights Act 2015
Consumer Rights Act 2015
As from the 1st October the Consumer Rights Act will fundamentally affect the sale and supply of goods and services. It applies to both the sale and the supply of goods to Consumers removing the distinction between goods sold direct to consumers and those sold on finance.
There are several areas of potential concern.
30 Day “Right to Reject”
In many of the cases dealt with by our legal helpline dealers are happy to carry out repairs but not to offer a refund or a replacement. Under the new legislation an admission that goods are not of “satisfactory quality” within 30 days of the sale will be grounds for rejection.
This inevitably means the whole question of what constitutes “satisfactory quality” as it applies to a vehicle, particularly a used vehicle, will come under increasing scrutiny.
Goods are satisfactory if they meet the standard that a reasonable person would consider satisfactory, taking account their description, price, or representations made about them. It may be relevant to take into consideration the fitness for all the purposes for which goods of that kind are usually supplied, their appearance and finish, freedom from minor defects, safety and durability, but the simple presence of a minor defect does not in itself mean that the goods are not of satisfactory quality, particularly on a used vehicle.
Any used vehicle will inevitably show signs of general deterioration due to wear and tear commensurate with previous use. This is reflected in the purchase price and it does not automatically mean the car is not satisfactory.
A safety related item will almost certainly give rise to a right of rejection but a purely cosmetic or ancillary issue (e.g. a stereo fault), even on a new car, may not mean the goods are unsatisfactory.
Any offer to repair should accordingly be made “entirely as a gesture of goodwill and without prejudice or admission of liability”, otherwise it may be construed as an admission that the vehicle is not satisfactory, making it difficult to defend a claim for rejection.
The importance of PDI checks
It is a central requirement of the new Act that goods must “conform to the contract”. One of the easiest ways to show that goods conformed is a documented PDI check. We are often surprised when dealers pay someone to check a vehicle but do not document it. Using one of our PDI check sheets should help deal with such issues. Where appropriate, a fresh MOT will help show the car was in a roadworthy condition at the time of sale, and retaining copies of any advertising photographs may help deal with any post delivery complaints about the cosmetic appearance of the car.
One attempt to fix the problem
When the Consumer Rights Act comes into force in October 2015, a customer will have the right to reject faulty goods within 30 days, or alternatively, they may request a repair or replacement providing that doing so is not impossible or disproportionate.
The right to a repair or replacement continues to be available to the customer after the 30 day right to reject period has expired. The dealer must attempt to repair or replace faulty goods within a reasonable time and without causing significant inconvenience to the consumer.
More importantly, customers are obliged to accept only one attempt by the trader to repair or replace the faulty good and are entitled to either a reduction in price or to reject the goods if the attempt to fix the fault has been unsuccessful or another fault occurs.
There is nothing, however, to stop the trader from offering a further attempt to fix the problem but the customer is not obliged to accept the offer.
This issue is likely to cause significant problems for the motor trade, e.g, a customer may seek to reject a car if they discover a fault with the electrics after the trader has already repaired the exhaust.
It is currently unclear whether dealers will have one attempt to fix each type of problem or whether Courts will take the view that it is simply one opportunity to repair within the first six months. Until there has been some case law on the point then each case will have to be considered on its merits.
It is clear however that if a dealer does get an opportunity to repair, then they should also take the opportunity to check over the vehicle to ensure there is nothing else that could provide grounds for rejection in the near future. We would recommend that, in effect, another PDI check is carried out.
Although Traders will be entitled to make a deduction from any refund to take into account the customer’s use of the goods there is no clear guidance on how this will be assessed. In the absence of any case law on the point, we will be recommending a calculation based on mileage covered and using the HMRC mileage rates as a starting point.
When is the Repair complete?
A repair is said to be complete when the goods are given back to the consumer in response to the request to repair. Essentially this would seem to mean the repair is complete when the dealer confirms the goods have been repaired.
As such, it will be essential to communicate properly with the customer, and to distinguish between diagnosis and attempts to repair. If it’s the type of fault where a part needs to be changed and then the car tested to check that the issue is resolved, then either the dealer should keep the car to test, or it needs to be made clear to the customer that this just the first stage, and further work may be required.
If, following diagnosis, no fault is found then this needs to be clearly explained to the Customer. There is no point in using up the one opportunity to repair by speculatively replacing parts in an effort to pacify the customer.
If a customer is entitled to reject the vehicle, then they will be entitled to a refund. This should be in the same form as the original payment, which means that if a part exchange is involved, that should be returned, together with any balancing payment.
The Consumer Rights Act does not effectively consider what will happen if the part exchange can no longer be returned, or returned in the same condition. It seems likely that dealers will be expected to refund the part exchange allowance, and it will therefore be important to ensure this is recorded when the deal is concluded.
The Act requires any refund to be paid within 14 days. This will cause problems if the V5 vehicle registration document is still with DVLA, so we would recommend including a statement in your Terms and Conditions to the effect that “Any refunds due will be made not less than 14 days after the vehicle is returned with all keys and documents”.
We would also recommend that dealers make it clear that “The customer will be responsible for the cost of returning goods to the supplying dealership in the event that they have to be returned for any reason whatsoever, including but not limited to cancellation,” otherwise dealers may be expected to collect cars.