Motor Vehicle Dealers and Repairers to be Regulated Under One Law in NSW

Wednesday 6 November 2013 @ 10.59 a.m. | Corporate & Regulatory | Trade & Commerce

In late October the New South Wales Government introduced the Motor Dealers and Repairers Bill 2013, a Bill the Government says reforms the regulation of motor dealers and motor vehicle repairers and ensures greater consumer protection for anyone buying a motor car or getting their motor car repaired.

The Bill seeks to consolidates the Motor Dealers Act 1974 (the Dealers Act) and the Motor Vehicle Repairs Act 1980 (the Repairers Act) into a single piece of legislation, the purpose being, in the Government's view, to recognise the connections which exist between the two sectors of the industry, namely dealers and repairers.

Key Aspects of the New Law

The Government, through the Fair Trading Minister, has stated in the Legislative Assembly that the Bill will ensure that the requirements of the legislation are applied consistently to both motor dealers and motor vehicle repairers, assisting those businesses which operate on both sides of the industry.

The aim of the proposed legislation is said to be to modernise the laws and encourage and recognise a stronger, more up-to-date marketplace.  As has become a common theme in recent times the Government is saying that industry will benefit from "cuts to red tape" but more importantly, the proposed legislation also creates a dispute resolution system intended to enable motor dealers to resolve disputes about unfair contract terms in their contracts with motor vehicle manufacturers or suppliers.

Essentially the bill consolidates the Dealers Act and the Repairs Act into a single piece of legislation which will regulate both motor dealers and motor vehicle repairers. The Minister say that "for the first time" the legislation establishes up-front the objectives of the Act making clear "the purpose and aims of the legislation to all stakeholders, including industry and consumers".  These objectives and aims are stated as:

  • providing consumer protection and remedies for consumers who purchase motor vehicles from motor dealers or obtain motor vehicle repair services;
  • establishing appropriate standards of conduct and transparency for motor dealers, motor vehicle repairers and motor vehicle recyclers;
  • providing enforcement mechanisms to prevent misleading or dishonest conduct and illegal  dealings with motor vehicles and parts; and
  • providing protection for motor dealers against unfair contract dealings by motor vehicle manufacturers.

The proposed legislation will according to the government introduce a new business licensing system, consolidating 16 motor vehicle repair licences and six motor dealer licences into only three licence types, namely:

  • motor dealer,
  • motor vehicle recycler and
  • motor vehicle repairer.

Also, the proposed legislation removes the licensing requirements for "car market operators and motor vehicle consultants" whom the Government says do not actually sell motor vehicles but act as landlords for a space or market in which private sellers come to sell their vehicles. The Government sees this as more red tape removal, the Minister saying:

"It is not necessary to license this business type as ultimately the consumer must deal with a motor dealer, which means they will be safeguarded by the consumer protections within this Bill."

Specific provision to ensure consumers get a good deal from those in the industry who broker motor vehicle sales are also part off the legislation.

Businesses will be offered the choice of a one-year or a lower costing three-year licence where those choosing a three-year licence will save costs and major time in dealing with government paperwork. A measure said by the Minister to be strongly supported by the industry and stakeholders.

The occupational licensing system for motor vehicle repairers will also be simplified and made more transparent according to the Government with the 13 classes of business licensing being consolidated into classes more in keeping with modern repair methods. Details of these classes of repair for licensing are to be developed in the regulation to accompanying the Bill and are to be examined in consultation with industry.

Other Changes

Some other Changes included in the lengthy legislation are:

  • Updating the current definition of "motor vehicle" in the repairers Act deemed to be old fashioned with references to a "motor carriage propelled by any volatile spirit or steam".
  • Amending the definition of "repair work" to make it clear certain basic work on a vehicle does not require a person to have a licence. Repair work that is not a repair class prescribed by the regulations will not require a licence. This clarification will allow certain work on a motor vehicle to be done without a licence, including basic repairs or accessory fitting such as fitting windscreen wipers, changing light bulbs, fitting roof racks or other basic accessories which can be bolted onto a vehicle.
  • Dispute resolution in the form of introducing new provisions to "establish a simple, cheap and effective mechanism for
    reviewing the fairness of manufacturers' contracts with motor dealers".  The Bill also extends this protection to motor dealers where manufacturers have engaged in unfair conduct.  These dispute resolution provisions aim to resolve any disputes through mediation in the first instance, then formal mediation and failing all mediation an application to the Consumer, Trader and Tenancy Tribunal for the matter to be determined.
  • The proposed legislation includes a wide range of changes to the powers given Fair Trading as the licensing authority and its powers to inspect and grant and refuse licences and to the various measures provide for consumers under the two laws for consumers.

Industry Reaction

The Federal Chamber of Automotive Industry (the Chamber) in and item on its web site attacks the proposed law as "confusing and nationally inconsistent" saying as follows on its website:

"Motor vehicle distributors in New South Wales will be hit with confusing and nationally inconsistent regulations if the NSW Government’s Motor Dealers and Repairers Bill 2013 passes through Parliament in its current form."

The Chambers main bone of contention is that Part 6 of the Bill, dealing with dealer/distributor relationships "misses this point" the provisions concerning unfair contract terms and unjust conduct "are simply unnecessary and will lead to inconsistent national regulation, increased regulatory cost for motor vehicle distributors and confusion for the broader industry". Seemingly the opposite of reducing red tape.

The Chief Executive of the Chamber is quoted as saying the:

"dealer and distributor relationships are appropriately covered by the provisions of the Federal Government’s Competition and Consumer Act and National Franchising Code. . .[T]he national legislation provides a consistent approach for dealers and distributors and this is a key element in business efficiency, . . .”

Status of legislation

Currently the Bill is before the Legislative Assembly having reached second reading stage on Thursday 24 October 2013 and will be an interesting one to follow through its next stages.

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