The Competition Commission’s Code of Conduct for Competition in the Automotive Industry, which is subject to final comments from stakeholders, will place tough new obligations on motor insurers who sign up.
Mark Griffiths, a director of law firm Norton Rose Fulbright, says although the code primarily targets manufacturers, it also places material obligations on insurers. He says: “The code is voluntary in nature but, once a party becomes a signatory, it will impose binding obligations that can be relied on by third parties, including service providers and consumers.”
He says that under the latest version of the code, insurers must:
- Fairly allocate work amongst service providers such as vehicle repairers;
- Broaden the allocation of work to entities either owned or operated by historically disadvantaged individuals;
- Publish a list of all approved service providers on their websites and/or other suitable media;
- Offer consumers a choice of approved repairers within their geographic area;
- Refrain from appointing any service provider for excessively long periods; and
- Refrain from continually renewing the appointment of a service provider.
Insurers will have to submit annual reports to the commission, Griffiths says. “As part of these reports, insurers will have to confirm their aggregate annual spend and volume allocated to historically disadvantaged service providers.
He says the commission published an initial draft of the code last year, and while some concessions have been made, the latest code still contains sweeping reforms to the service, maintenance and repair of vehicles.
“The commission says it is pursuing the code as an alternative to enforcement action, because it receives complaints alleging anti-competitive practices throughout the automotive aftermarket sector. Some of these complaints have apparently focused on the allegedly unclear and unfair allocation of work by insurers to motor-body repairs,” Griffiths says.
The commission called for final comments on August 1, and the deadline for input is September 11.
“This consultation is the last opportunity for stakeholders to comment before they decide whether or not to sign up to the code and be subject to extensive monitoring obligations,” Griffiths says.