153/04    27 September 2004

SMMT code of practice first to receive OFT approval

The Society of Motor Manufacturers and Traders (SMMT) today became the first industry body to secure OFT approval for its consumer code of practice under the OFT's Consumer Codes Approval Scheme (CCAS).

The SMMT New Car code sets out the standards that vehicle manufacturers have to comply with on new car sales; warranties on new cars and older cars where the manufacturer's warranty is still current; availability of replacement parts; advertising and complaints handling. All volume car makers, and the majority of smaller manufacturers, are signed up to the code. In total, 99.7 per cent of the 2.5 million new car market will be underpinned by the code's provisions.

By signing up to the OFT approved code, manufacturers have agreed to provide the benefits outlined within the code of practice to consumers. These include:

• an obligation on manufacturers to include in their warranties information on where consumers may seek redress
• access to the SMMT conciliation scheme which assists consumers in the event of a dispute
• an independent redress and arbitration scheme
• a consumer guide clearly advising consumers of their rights and what SMMT members will deliver under the code
• staff training seminars to ensure that members understand their duties under the code and follow it in practice
• a new 'penalty points' system linked to compliance and a range of sanctions, including monetary fines, imposed on members for non-compliance with the code's provisions
• regular customer satisfaction surveys so that problem areas can be addressed should the code fail to meet its promise.

The OFT consumer codes approval scheme has two stages:
Stage one – the code sponsor makes a promise that its code meets the OFT's core criteria in principle. The sponsor must make sure its code contains measures designed to remove or ease consumer concerns and undesirable trading practices in its sector
Stage two – the code sponsor must prove its code lives up to the initial promise it made. That means the code sponsor must demonstrate that the code is being effectively implemented by its members and that consumer disputes can be properly resolved.

The OFT will only approve and promote codes that are shown to safeguard and promote consumers' interests beyond the basic requirements of the law. Members operating to a code that achieves OFT approval will be able to display the OFT 'approved code' logo.

Penny Boys, OFT Executive Director, said:

'This is good news for car buyers and for SMMT members. The OFT codes scheme is deliberately rigorous and demands commitment to high standards of customer service from code sponsors and members. The OFT approved codes logo means consumers know they are dealing with a reliable supplier, and that they will be treated fairly if problems arise.'

SMMT chief executive Christopher Macgowan said:

'We are extremely proud to gain OFT approval for the SMMT New Car code. It demonstrates the genuine commitment of the industry to make sure that the 2.5 million people who buy a new car every year continue to receive the highest quality service.'
 
NOTES

1. The SMMT is the  trade association for the UK motor industry which represents some 600 member companies ranging from vehicle manufacturers, component and material suppliers to power train providers and design engineers. The signatories of the SMMT New Car Code of Practice (about 40 car manufacturers) represent the majority of the total new car market (99.05 per cent of new vehicle registrations in the UK – source MVRIS, 2002).

2. The Enterprise Act 2002 gives the OFT increased powers to help develop effective self-regulation through approving and promoting consumer codes of practice that meet the OFT's core criteria.

3. The OFT's Consumer Codes Approval Scheme aims to promote and safeguard consumers' interests by helping consumers identify better businesses and to encourage those businesses to raise standards of customer services  by meeting the OFT's core criteria.

4. Code sponsors who have completed stage one and are working towards approval of their code, are:  the Ombudsman of Estate Agents Company Ltd (OEA) (see press release 69a/02); Vehicle Builders and Repairers Association Ltd (see press release 69b/02); the Direct Selling Association (see press release 84/02) and the Association of British Travel Agents (see press release 15/03).