IS BANNING DIESEL BAD FOR THE ENVIRONMENT?

IS BANNING DIESEL BAD FOR THE ENVIRONMENT?

Scrappage Scheme

Evidence suggests that a rise in petrol registrations is contributing to global warming

Diesel-powered vehicles have been in the news a lot over their environmental performance, or lack thereof. Conversely, industry experts have warned that a clampdown on diesel vehicles could result in the UK actually missing European environmental targets.

Mike Hawes, Chief Executive at SMMT warned that demonising diesel conversley will have an adverse effect on the environment. “Customers are not moving straight from diesel to electric. They’re moving to petrol or staying put in older cars” he said when speaking at the Society’s annual dinner in December. “So we’re seeing a falling market, declining revenues, rising costs, rising CO2. And, yes, this will have an effect on climate change goals. This is not a policy without consequences”.

Data firm CAP HPI has authored a report which concludes that the EU’s 2021 environmental targets could be missed if the percentage of diesel vehicles continues to decline on UK roads.

The report points out that some of the environmental criticism of diesel vehicles is misguided.

All the countries in the report achieved the 2015 CO2 emission target for cars registered in that year. While France and Italy were comfortably below the 130g/km line, the UK is closer, and Germany only cleared the hurdle by 1.4g/km.

UNACHIEVABLE
Matt Freeman, Managing Consultant at CAP HPI and the report’s author, commented that without continuing sales of diesel engine cars, this target reduction is unachievable: “Hitting the 2021 environmental targets for CO2 reduction would be a significant challenge without the likely decline in diesel. Therefore it is imperative that diesels continue to command a substantial share of the new car marketplace.

“If consumers, with no option of transitioning to hybrid or EVs, switch to petrol the environmental impact is clear – their CO2 emissions would likely rise between three percent and 23 percent according to model.”

The report argues consumer education is key as there is an apparent risk that consumers are being led to believe that ‘all diesel is bad’ and that any suggestion that there is a good diesel option is due to the automotive industry seeking to resist change and preserve the status quo. This level of miscommunication needs to be countered if diesel is to have a short- to medium-term future.

SKEWED
However, the media coverage on diesel is, to say the least, skewed against the fuel no matter what the improvements and consumers are confused. At the aforementioned SMMT dinner, Greenpeace crashed the stage to hand VW boss Paul Willis a faux ‘award’ for ‘toxic air’ and coverage in the mainstream press has been hardly less hostile. This has resulted in drop in demand (by about a fifth) in new registrations for diesel powered cars and new registrations for light vehicles as a whole are down 5.7 percent compared with last year. This has lead to several analysts making doom-laden predictions about the future of new car retail through franchises coming to an end entirely. These might be a little wide of the mark, but it does seem that for a private motorist wanting to upgrade to the latest technology, the idea of a conventional powertrain must seem a bit old fashioned.

Most people reading this might wonder why they should care, after all, surely this is a hole that the VMs have dug for themselves? It doesn’t affect the aftermarket… Unfortunately, it does. Tens, if not hundreds of thousands of vehicles won’t go through trade auctions and back into the aftermarket as the VMs are holding their own versions of scrappage schemes. As far as I know, no-one has made a serious attempt to retrofit otherwise efficient Euro- 3 onwards common rail diesel engines with devices to clean up their carcinogenic soot, meaning that they are replaced with petrol vehicles that are only marginally less toxic, but will emit greater quantities of greenhouse gas. Meanwhile, the face of the retail motor industry as a whole is besmirched by the failure of the VMs to get a grip on this situation which is a real pity for all involved.

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INVISIBLE HEAT FROM MINI DUCTOR VENOM

INVISIBLE HEAT FROM MINI DUCTOR VENOM

PROMOTIONAL CONTENT ON BEHALF OF INDUCTION INNOVATIONS

Mini-Ductor® Venom® – MDV-777

Mini-Ductor Venom generates Invisible Heat® to release ferrous and some non-ferrous metals from corrosion and thread lock compounds without the dangers of open flame and up to 90% faster – ¾” nuts are turned red hot in seconds. Venom’s feature set allows users to repair vehicles and equipment faster, safer and more profitably, and to salvage parts normally discarded.

  • Coil Twist Lock
  • Angled Design with Trigger
  • LED Usage Indicator
  • User Controlled LED Switch
  • Two Year Limited Warranty

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THE RIGHT PART GOES BEHIND WHAT FITS

THE RIGHT PART GOES BEHIND WHAT FITS

The rules around replacement parts are complex, but worth getting your head around, writes BM Catalysts Commercial Director Mark Blinston.

While there might be more hot air than hard facts about emissions across the mainstream press about vehicle emissions, there can be no doubt that reducing toxic gas and restoring trust in the motor industry is the greatest problem faced by the trade at the moment.

Everything is geared towards reducing emissions and much of the emphasis seems to be pointed towards vehicles and how we can reduce the impact that they are having on air quality. You may be wondering what we can do about it in the aftermarket; but one thing we can do is making sure the right part is fitted to the right vehicle based on the emissions standard of the vehicle in question – the Euro level.

Vehicles and replacement emission control devices must meet specific standards for exhaust emissions before they can be offered for sale in the European Union. Emissions limits are commonly referred to as Euro standards or levels.

Emissions are measured using a standardised test cycle called the New European Driving Cycle (NEDC). The NEDC was last updated in 1997 and is gradually
being replaced by the World Light Test Procedure (WLTP), which is designed to better replicate real driving conditions. WLTP is now being applied to new vehicles (types) but does not yet apply to replacement parts.

In order to test the durability of each part emission test results are most frequently multiplied by a deterioration factor; with the adjusted result then compared to the legislative limit. Deterioration factors are designed to simulate the likely change in performance of the part after it has aged with use over time. These deterioration factors have become more stringent over time, and so when coupled with the gradual lowering of limits it becomes considerably harder to achieve a pass when testing newer parts and newer vehicles. The largest increase in deterioration factors occurred between Euro four and Euro five.

In order to meet higher emission standards, it is frequently found that the OEM part is made to a higher specification than the lower EU level part it has superseded. Legislation requires a comparison of performance between a replacement part and its OE equivalent and so it naturally follows that tougher standards + higher deterioration factors + higher performing OE parts = a real need for a higher specification replacement part.

RIGHT LEVEL

The Euro level of each vehicle prescribed at the point at which that vehicle is Type Approved. A replacement part cannot be approved to a lower Euro level than that of the original vehicle; so if the vehicle is Euro five then the replacement must be approved to Euro five levels/limits. Testing and approving this part to Euro four would mean that it cannot be proven that it meets the relevant emissions standards and therefore cannot legally be fitted to any Euro five vehicle.

There are many catalytic converter and diesel particulate filter (DPF) references that appear to be physically identical but are, in fact, designed and approved for vehicles that carry different Euro levels. This is made possible as the internal specification of the part is largely the key to the emissions performance of the vehicle. For example, the Euro five version of the close-coupled cat for the Citroen C1 requires a specification that is more than 3 times that of the Euro four version of the part. A similar story is true of the Euro four/five Fiat five00 and Ford KA. Quite apart from it being illegal to fit the Euro four version to a Euro five vehicle, it will cause poor emissions performance with a much higher chance of related vehicle issues and potential part warranty returns. It can be easy to source the cheapest product which isn’t necessarily approved to the correct Euro level – the consequence of which is then a part that will actually not perform to the standards required.

CATALOGUE
The correct cataloguing of aftermarket parts is complex and challenging and many consumers will not be aware of the Euro level of their vehicle. It is therefore down to the garage and parts distributor to ensure that the part that is being sourced is approved for sale to the correct Euro level of the vehicle in question. This is something that has recently been identified as a “problem” in the aftermarket whereby parts can be physically the same, catalogued with the same start and close dates yet be very different both in terms of the internals and what they are legally approved for sale to fit.

In an effort to reduce the number of occasions that the incorrect part is being supplied and fitted to the vehicle, MAM (Autocat) will shortly be introducing the Euro level as a search criteria when identifying the correct part for a particular vehicle. Manufacturers of catalysts and DPFs will be asked to submit the Euro level for which their part has been homologated to enable an accurate match upon lookup. This is a positive step that the aftermarket is taking to reduce vehicle emissions.

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ELECTRIC VEHICLES VS THE AFTERMARKET

ELECTRIC VEHICLES VS THE AFTERMARKET

What challenges does the lubricant industry face? With impending bans on traditional vehicles and increasing market share of EVs

At the end of last year, the UK media reported a sixth month consecutive decline in sales of diesel cars. UK Government’s uncertainty about how to treat vehicles once classed as ‘the green option’ has led to consumer caution about buying cars that might be subject to higher taxation in future.

In July 2017, the UK Government declared that from 2040, sale of motor vehicles powered with internal combustion engines, petrol or diesel, would be banned. This followed similar announcements made by the French Government earlier that year. Even Original Equipment Manufacturers (OEMs) followed suit with Volvo and more recently Jaguar Land-Rover announcing the end of petrol and diesel car sales from 2019 and 2020 respectively.

The impact on the automotive sector, its fuel and lubricant sales, as electric vehicle sales increase cannot be underestimated.

Barclays’ analysts reported that if electric cars with greater efficiency increased to one third of the current automotive sector, this would cut global oil consumption by 3.5 million barrels a day by 2025. This is roughly the equivalent of Iran’s current supply of oil at 3.8 million barrels a day that is the Organisation of Exporting Petroleum Countries (OPEC)‘s third largest member.

Globally, demand for oil is still growing. In their 2017 outlook OPEC signalled that the medium-term demand for oil for the period 2016–2022 would increase by 6.9 million barrels a day, rising from 95.4 million barrels in 2016 to around 102.3 million barrels a day by 2022. Developing countries are expected to account for the majority of this increase, with demand expected to increase here by 43.2 million barrels a day in 2016 to 49.6 million barrels a day by 2022.

A cut in automotive demand for oil would effectively wipe out half the expected increase in global oil demand by 2022. But globally, the demand for oil would still increase.

Transportation is expected to remain the largest consumer of oil products, both fuel and lubricants, well into 2040. Much of the sector faces weak competition from alternate sources of fuel and lubricants although improved efficiencies, the rise of hybrid or electric vehicles and a tightening of energy policies will help to decelerate increases in the demand for oil from this sector.

WHAT IS ALLOWED?
Details of the French and UK Governments’ decision to ban conventional internal combustion engine vehicles is still vague. Will hybrid vehicles still be allowed? What about heavy goods vehicles or diesel powered public vehicles such as taxis? Some analysts believe that Governments might have kicked an emissions issue aligned to poor air quality into the long grass. The UK faced with the prospect of fines by the European Union over the quality of its air in cities, needed to be seen to be doing something positive about the issue.

Today’s vehicles are cleaner and leaner than those of ten or twenty years ago. Exhaust after treatment devices, both catalytic converters and diesel particulate filters, have removed many post-combustion harmful gases. Car scrappage schemes promoted by both Government and car manufacturers have incentivised owners to replace ageing vehicles with more modern cars. Changes to car taxation duties reward cars with lower emissions.

Electric cars might not be the panacea for everyone. Limited battery range and the high cost of lithium power cells means that extended ranges between charges of 300 miles or more are not yet a reality. As local town run-arounds or shopper cars, electric vehicles provide a viable alternative to conventional vehicles for journeys typified by short local stops. For longer commuter journeys then electric vehicles alone do not currently provide a realistic solution in the absence of a national and comprehensive electric charging network.

Much needed investment in electric charging stations along major motorway routes and trunk roads still remains in short supply. The Petrol Retailers Association (PRA) gave evidence to UK Government’s Automated and Electric Vehicles Bill Committee in November arguing against proposals to mandate electric vehicle charge points in petrol stations and motorway service areas. Although subsidies exist for domestic installation, the Bill proposes that a larger commercial network of charging points would be paid for by fuel retailers who would, by implication, pass the charges back to motorists. Government would not fund such a scheme.

REQUIREMENTS
In terms of engine oil and lubrication requirements, hybrid vehicles act in a slightly different manner to more conventional vehicles. A distinguishing feature of hybrid electric vehicle is that the conventional engine switches off when the power available from the electrical cell exceeds that needed to propel the vehicle. This results in lower operating temperatures and higher stress during stop/start for the conventional engine, which could lead to increased sludge and varnish than that of conventional engines.

What of service intervals? In the UK, service intervals of 12,000 miles are usually expected by motorists. In America, some dealers are claiming that hybrid vehicles require oil changes every 5,000 miles or 10,000 miles if using a synthetic, more typical of conventional cars sold in that country. The move to lower viscosity oils could also confuse matters if a motorist has been used to using a 5w30 engine oil in their hybrid ten years ago and today the same, but newer, model of their much-loved car requires a lower viscosity lubricant of 0w20 or less.

For the aftermarket, although electric cars might prove a challenge today, a hybrid car is a more popular and obvious choice for motorists. They provide the assurance of extended ranges for longer journeys similar to that of conventional vehicles, with the benefit of lower emissions under town centre driving conditions.

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EXERCISING CAUTION WHEN HANDLING COMPLAINTS

EXERCISING CAUTION WHEN HANDLING COMPLAINTS

No matter what industry you work in, there will come a time when you receive a complaint based upon the services or goods you have provided.

Unfortunately, the automotive industry is no exception, and it can be easy to see such complaints as an unjustified attack on your company’s good reputation. In the heat of the moment, aggrieved business owners can jump to the defence of their company, engaging in a war of words with the complainant.

According to Gemma Carson, Head of Dispute Resolution at law firm Wright Hassall, they could do more harm than good: “Naturally, business owners can feel like they have a duty to protect their employees, and without thinking, fire back with an angrily worded email, expressing their displeasure with the original complaint.

“When emotions are running high, it is easy to get involved in a heated debate about the rights and wrongs, mistakes and failures, or actions and inactions of one party or another. It is at this point that things can escalate quickly and easily get out of control.

“The most serious issues can occur when promises or threats are made without due consideration given to any existing contractual agreements between the two parties.

“To reduce the risk of worsening the situation, there is plenty that can be done and it should start with a careful consideration of the content of the complaint. The pressure may be on, but take your time and ensure you make no commitments and no threats.

“Allow yourself time to properly cool down before sending a response, as emails sent while emotions are still running high have a nasty habit of biting back later down the line. “Instead, begin by drafting your email and save it to your ‘virtual mantelpiece’. This will give you time to review the situation and think carefully about what you want to say, instead of hitting back with a knee-jerk reaction.

“It is also important to check whether a service agreement and/or a contract exists between the parties. You should read any agreements carefully and check what they actually contain.“With an agreement in place, you may be able to respond to the complaint by highlighting any relevant contractual terms that may help you manage the situation.

DON’T IGNORE
“When dealing with a complaint, it is important to be proactive. By acting quickly, you can help diffuse the situation without the need for any legal involvement.

“Personal, face-to-face meetings will often help resolve issues before they can escalate. It is best to either raise the matter directly or if you suspect it to be more serious, to seek legal advice before you make contact.

“If it does feel serious, you should ensure you retain all of the relevant information relating to the complaint, including documents, correspondence and any products or specimen products from the same batch. It can help if you carry out and document any inspections of equipment or machinery.

GET HELP
“Seeking legal advice early on does not necessarily mean a serious legal dispute has arisen.

“Dispute resolution advice is very effective when delivered soon after the complaint is received, but your lawyers do not need to take an active role in the issue. They can offer strategic legal guidance focused on resolving complaint situations and diffusing potential disputes, whilst preserving the commercial position for the future.

“The most important legal factor to remember is that making a rash statement or taking a knee- jerk decision to stop providing your services or products, by sending that angry e-mail draft without first putting it on the virtual mantelpiece, may cause a serious breach of contract.

“If nothing else you risk a serious argument and potentially a threat of injunctive proceedings. In simple terms, a breach of contract can entitle the party affected by it to terminate the contract and then bring legal proceedings against you for damages.

“For this reason, sending that inflammatory e-mail without firstconsideringthe consequences could be a huge mistake that ends up costing time and money, both of which could be better spent managing or growing the business.

“Finally, where parties have become so embroiled that legal proceedings are not only threatened, but seem the only option, choose to work with experienced lawyers who understand commercial disputes and demonstrate a commitment to reaching an early, commercial and cost- effective resolution” concluded Carson.

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CAT AWARDS 2018:  VOTING NOW OPEN

CAT AWARDS 2018: VOTING NOW OPEN

The Awards have taken place and the winners have been announced. Find out who won what in the March edition of CAT

 

 

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PHOENIX COMPANIES RISING FROM THE ASHES

PHOENIX COMPANIES RISING FROM THE ASHES

It’s a sad fact of life that businesses can and do fail and the fallout can impact upon many – owners, shareholders, employees, customers and suppliers alike. Often there is nothing underhand about the failure – the company is wounded fatally by a lost contract, a massive hike in rent or rates, or has been unable to adapt to changing market conditions.

Occasionally, however, firms are set up to fail through the deliberate actions of their management with a view to defrauding creditors. In certain situations, directors of the failed company turn to what is known as a ‘phoenix’ company.

PHOENIX RISING
‘Phoenixing’, or ‘phoenixism’, are terms that describe the practice of carrying on the same business or trading successively through a series of companies which in turn becomes insolvent – the idea being that a new business rises from the ashes of an old one, like the Phoenix bird of Greek myth, hence the term. Each time this happens, the business of the insolvent company (but not its’ debts), is transferred to a new, but similar, phoenix company, usually through the use of a pre-pack administration. A pre-pack administration involves the business of the liquidated company being sold as a ‘going concern’, (i.e. as an operating business) through a process orchestrated by an appointed insolvency practitioner. The insolvent company then ceases to trade and might enter into formal insolvency proceedings or be dissolved.

Phoenixing often harbours negative connotations, mainly because of the actions of directors who force their companies into insolvency to then purchase back company assets through the new company, leaving behind any liabilities in the insolvent company. The process often involves financial loss being suffered by the creditors of the failed company – a practice that can both leave a nasty taste in the mouth and give phoenix companies a rather bad reputation.

There is no doubt that in rare circumstances, the directors of a company do set out to commit insolvency fraud and so will deliberately reform a business using a phoenix company to avoid paying creditors. They will ensure that the phoenix company is set up so that it appears slightly different from the insolvent company. The business will continue to trade and operate and the creditors of the insolvent company will not usually recover their debts as they remain with the insolvent company – a separate legal entity – and will not be transferred over to the newly formed company. The bad news for creditors and suppliers is that they will have no contractual claim against the new company for debts incurred by the old, defunct, company.

THE LAW SAYS
The governing law of England and Wales allows shareholders, directors and employees of insolvent companies to set up new companies to carry on a similar business, so long as the individuals involved aren’t personally bankrupt or disqualified from acting in the management of a limited company, and the trading name of the new company is not the same or similar to that of the insolvent company. Setting up as a new entity is legal if the process has been managed properly. Entrenched company law principles mean that a limited liability company is a legal entity separate from that of its shareholders and directors. Except in very limited circumstances, the responsibility for debts incurred remain that of the company, subject to the actions of the company directors.

One circumstance where a director can be made personally liable, jointly and severally with the company, for all the relevant debts of the new company, is where they contravene the Insolvency Act 1986 by acting as a director of a company with a prohibited name (i.e. a name which is similar to suggest an association with the previous company’s name). Further, the director will also be liable to a fine or potential imprisonment.

SEEKING SOLACE
So, what can you do if you suspect some sort of insolvency fraud being undertaken by a company that you are dealing with? What happens where you find yourself in the situation where you have supplied a company and your invoice has not been paid? What should you if do you’re also unable to reach anyone at the company to speak to about the money that you are owed?

The company at this point may or may not be insolvent. If the company in question is insolvent, the appointed insolvency practitioner’s function is to investigate the practices of the company and distribute any assets found to the creditors of the business. Predominantly, the underlying assets of the insolvent company are required to be sold at market value and not (deliberately) at an undervalue. You, as a creditor of this business, should have an interest in such investigations and you should speak to and assist the insolvency practitioner where possible.

Company directors owe numerous duties to their company and the key duties are codified in the Companies Act 2006. These include promoting the success of the company, exercising independent judgement, exercising reasonable care, skill and judgement, and avoiding conflicts of interests. Where a company is threatened with or starts to undergo insolvency proceedings, directors not only owe duties to the company, but also to the creditors of the company and a number of provisions of the Insolvency Act 1986 apply in this case.

STRICT RULES
There are strict regulations placed on the directors of an insolvent company and any appointed insolvency practitioner regarding the use of a phoenix company to carry on the business of an insolvent company. The intention of the regulations is to protect the interests of unsecured creditors and to prevent company directors from escaping their obligations. It is a criminal offence under the Insolvency Act to knowingly carry on business with an intention to defraud creditors.

If this is proven, an insolvency practitioner may make the decision that the director is liable to make a contribution to the company’s assets on winding up. Remember, it is legal for a phoenix company to be formed from the insolvency of a prior company. However, any director that is subject to a disqualification order or a bankruptcy order cannot act as a director of the newly formed company. You may suspect that a director of a company that you are dealing with may be acting in breach of a disqualification or bankruptcy order and if this is the case, you should also report this to the Insolvency Service.

DEAL WITH IT
Information is available online, free, at Companies House to any member of the public who wishes to see who is registered as a director of a company that they are dealing with. The name of the company (this may be different from the name with what the company trades as) or the company number will be required to use the Companies House search function.

Despite the losses that can be experienced by a creditor because of the use of a phoenix company that may have been subject to insolvency fraud, the financial failure of a majority of UK companies is not usually as a result of wrong doing nor the misconduct of company directors. Companies can be dissolved or face financial difficulties for a variety of reasons.

One protective solution, obvious as it sounds, is to conduct preliminary investigations on new customers before entering into a trade agreements or offering trade credit. As noted above, check the publicly available register at Companies House for information on company directors and their companies, seek trade references, and also carry out credit checks. Forewarned is forearmed.

It may be worth checking to see whether your supplier contracts have, or possibly should have, clauses which aim to protect your legal ownership of the supplied goods until payment has been made by a customer. Some supplier contracts may include what are known as retention of title clauses which will state that the goods delivered by a supplier remain their property until payment by the customer has been made. Legal advice should be sought as ‘retention of title’ clauses require careful thought and drafting to ensure that they are effective, an event of insolvency should be properly provided for in such terms and conditions in order for a supplier to limit exposure to the risk of non-payment.

WHAT TO BE AWARE OF
Directors who don’t conduct business in line with their legal obligations face potential disqualification from acting as a company director. The Company Directors Disqualification Act 1986 prohibits directors whose conduct led to the insolvency of a company from taking on similar roles elsewhere for a prescribed length of time. If, as a creditor, you feel or suspect that a director of the company you are dealing with is conducting their business in an unfit manner, you can report them either to the Insolvency Service, Companies House or the Serious Fraud Office.

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REBOXING & PRODUCT LIABILITY RISK

Could the last big taboo in the aftermarket land suppliers or retailers in legal trouble?

The act of putting one product in the carton of another is something that we all know happens throughout the aftermarket at all levels. There’s one product in particular that we know is packed in the UK in a dozen or more brand images – and no doubt there are others.

However, times are changing ever higher up the list of boardroom priorities for businesses across multiple sectors. Increased media attention on product safety incidents brings the potential for a badly managed crisis to kill off a brand entirely. Growing consumer awareness is translating into more civil claims and ever closer scrutiny by regulatory authorities in the wake of scandals such as ‘dieselgate’ and Grenfell Tower is partnered by dizzying fines where serious failings are identified.

In the light of all this it is critically important that all businesses involved in product supply chains understand their responsibilities and manage risk, regardless of where they stand in the product journey from factory to end user.

It’s interesting that retailers and others in the supply chain who do not actually make a product often regard themselves as immune from these issues and assume that their suppliers will be the target of claims or regulatory scrutiny if things go wrong. Unfortunately this is not often a safe assumption: many regulatory regimes place responsibilities not only on the manufacturer, but also on others in the supply chain, particularly (but not exclusively) those who place their brand on the product.

UNFIT FOR PURPOSE
The act of placing an unsafe consumer product on the market is an offence, regardless of whether or not a producer knew about a potential safety defect, and there is a requirement to notify the regulatory authorities promptly where a producer becomes aware that a product he has placed on the market – or supplied poses – risks to a consumer that are incompatible with the general safety requirement under the GPSR.

Many other regulations also extend obligations to businesses placing their own brand on products – including, amongst others, the Construction Products Regulations 2013, and the Electrical Equipment (Safety) Regulations 2016 – the latter imposing on manufacturers requirements regarding regulatory conformance and an obligation to take action in cases of non-conformity and notify authorities where there is a risk, with the definition of ‘manufacturer’ . [See panel for more detail].

Any business supplying articles for use at work will also be caught by the requirement under Section 6 of the Health and Safety at Work Act 1974 (‘HSWA’) to ensure that the article is designed and constructed that it will be safe and without risks to health at all times when being used by a person at work. Fines for breaches of the HSWA have recently been scaled up dramatically.

CIVIL LIABILITY
In addition to the regulatory regime, those placing their brand on products are potential targets of civil claims for damages under the Consumer Protection Act 1987 which implements the Product Liability Directive in the event of an injury or damage to personal property caused by a defect. For these purposes, a defective product is one which fails to meet the standards of safety which users are generally entitled to expect. Crucially, a failure to warn of non-obvious risks or the provision of inadequate instructions can render a product just as defective in the eyes of the law as a situation where a safety risk is presented by a design or manufacturing defect.

Liability for claims of this type is strict, meaning that no fault on the part of the own-brander is required for liability to arise. In practice, a potential claimant looking to recover damages following an injury is much more likely to target the business which placed its brand on the product than trouble itself with identifying the underlying manufacturer or component supplier. It is left to the business whose brand is applied to recover damages paid out through strict liability claims through its contracts with suppliers (assuming they don’t exclude the right to do so).

Potentially, resellers and distributors who deal directly with consumers could face further claims under the Consumer Rights Act 2015 (CRA). The CRA has the effect of implying terms into an agreement in favour of a consumer, meaning, for example, that goods sold must be fit for purpose and of satisfactory quality. These terms cannot be excluded. Under the CRA, a consumer can enforce these terms and subsequently is provided a series of remedies, including the right to reject, or the right to have goods repaired or replaced.

Resellers and distributors could also be hit with claims in negligence when failing to exercise reasonable care and skill in the course of their business. Claims in contract may also follow, although these will turn on the specific contractual terms in place in each circumstance.

MANAGING RISK
It’s clear that there are numerous routes by which businesses branding products as their own may expose themselves to regulatory investigation and prosecution of civil claims.

It is essential that any business in this position addresses its mind to the management of these risks. There are a number of practical steps that businesses can take.

Firstly, steps should be taken to ensure that allocation of risk is given proper consideration when entering into agreements with manufacturers. This may allow the business to pursue the manufacturer through a contractual claim. Particular attention should be paid to warranties and indemnities, and to the responsibility for different aspects of the product specification.

Next, audit rights should be included in supply agreements so that the retailer (own brander) has a means of verifying the quality and robustness of manufacturing and design processes, for example by inspecting manufacturing processes or by paper-based audit.

Traceability is crucial, in terms of managing product safety crises. By pinning down manufacturing dates/times/batch numbers, the scale of any recall is reduced and affected products can be recovered quickly.

Lastly, the potential for a product safety issue to cascade into a major reputational crisis is real in the age of globalised social media, and the speed with which events can move means that advance planning for such situations is crucial. Any business selling products under its own brand should prioritise the creation of a crisis management plan. This should address, amongst other matters, how communications with customers and regulators will be handled, management of press communications, risk assessment and decision making processes and logistical aspects of recovering and replacing affected product in the market.

There are a number of key issues that need management and it should be emphasised that the law in this area is highly specific to individual product types and sectors. Retailers and others considering own- branding are well advised to obtain guidance from specialists to understand the risks and ensure that they take appropriate steps to manage them.

Those importing products into the EU should be particularly alert to the fact that, even if their branding is not applied, they may be treated as a producer and assume responsibilities and liabilities as a first importer.

The commercial benefits of own-branding are often compelling, but businesses entering this area should do so with their eyes open, understanding that by placing their name on a product they may be substantially increasing the legal and reputational risks which they bear.

YOUR NAME, YOUR RISK
Let’s take an example. Most products intended for or likely to be used by consumers (i.e. including those which might be targeted primarily at professionals but which consumers may buy too) fall within the scope of the General Product Safety Regulations 2005 (GPSR) which implements the EU General Product Safety Directive. These regulations place a strict and onerous obligation on ‘producers’ to ensure that the product is ‘safe’ – meaning that under normal or reasonably foreseeable conditions of use it presents either no risk or only the minimum risk compatible with the product’s use.

Critically, For the purposes of the GPSR, a producer is any person who manufactures a product, or a person who presents himself as the manufacturer “by affixing to the product his name, trademark or other distinctive mark”. This distinction means the obligations placed on producers are also applicable to retailers, merchants and distributors in circumstances where they place their own brand on the product.

From the perspective of consumers and regulators, of course, this makes perfect sense: if a business sells a product as its own, it should be seen to be taking responsibility for the safety of that product. However the rule continues to catch out businesses who are attracted to the idea of a product being associated with their brand, but do not appreciate the responsibilities which come with such a move. The effect of this is that retailers and merchants applying their own brand to products need to ensure that they can be satisfied with the safety of those products. This means not only that they are designed and manufactured in accordance with technical requirements and industry standards, but also, for example, that adequate warnings and instructions for use are provided.

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EMPLOYEE MONITORING

EMPLOYEE MONITORING

Employee monitoring methods should be considered carefully

A recent decision by the Grand Chamber of the European Court of Human Rights has brought the question of employee monitoring to the forefront of employers’ minds once again. The Grand Chamber in Bărbulescu v Romania examined the ability of employers to monitor their employees’ work, email accounts and in particular, the extent to which employers can check whether employees are using email accounts for solely work-related purposes.

Mr Bărbulescu was dismissed by his employer for unauthorised personal use of the internet. The dismissal arose as a result of allegation that Bărbulescu had been using a Yahoo messenger account whilst at work. Following various decisions in Romania and in the European courts, the Grand Chamber of the ECHR determined that Bărbulescu’s private life and correspondence had been infringed.

It is worth noting that employers can be found to be vicariously liable for the actions of their employees in the course of their duties. This means that employers may find themselves liable for their employees’ actions if the employee causes damage or loss to a third party. Employers therefore often find that they have a heightened interest in understanding – and keeping tabs on – the activities of their employees.

EMAIL AND INTERNET USE
The Grand Chamber decision in Bărbulescu v Romania highlights the fine balance between an employee’s reasonable expectation of privacy and an employer’s right to check the activities of those working for them. It was not sufficient for the employer to simply inform the employee that there was an internet usage policy in place but instead, the Grand Chamber found the employee should also have been made aware of the extent and nature of the monitoring activities that the employer was putting in place.

In the UK, the monitoring of employees is heavily regulated by existing legislation, which places limitations on the
powers of employers to monitor their employees’ private communications, including the Data Protection Act 1998 (and soon to be the General Data Protection Regulation, which comes into force in May 2018). Employers must provide
legitimate reason to justify the monitoring of an employee’s communications. This requires some form of assessment to be in place in order to decide whether legitimate reasons are in place.

The importance of an assessment can also be found in the Information Commissioner’s Employment Practices Code in the UK. The Code recommends that employers carry out an impact assessment, taking into account factors such as the purpose behind the monitoring arrangement and any benefits or adverse effects that arise from this monitoring.

Ultimately, employers must be satisfied that they have achieved the correct balance between protecting workers’ privacy and the interests of the business. Carrying out an impact assessment in relation to communications monitoring is one way in which employers can demonstrate that they have achieved this. Employers should also ensure they have a communications monitoring policy in place and where possible, this should be backed up with specific training on the use of IT and email systems.

DRUG AND ALCOHOL MISUSE
Employers have a responsibility to look after the wellbeing, health and safety of employees whilst they are in the workplace, and this duty may extend to ensuring that employees are not misusing drugs or alcohol.

The extent to which employers will need to monitor their employees’ use of alcohol or indeed drugs, will depend on the particular environment in which the business is based. For instance, in some circumstances, it may be appropriate for employees to consume alcohol whilst entertaining clients. For other industries, however, employers will need to be much more cautious about their employees’ use of alcohol or drugs. Those whose staff use vehicles as part of their jobs, for instance, will need to maintain a higher level of vigilance in this respect.

Employers may want to consider whether it is necessary to carry out drug screening or alcohol testing. This will – of course – only be relevant in particular industries, however, for those where this is likely to be an issue, then employers should ensure that reference to screening or testing is included in a policy given to all staff.

Even with a drug screening or alcohol testing policy in place, employers will not be able to require staff to submit to testing without their specific consent to do so. One option is to draft the monitoring policy to say that withholding consent is a misconduct offence in itself.

TRACKING
Employers whose staff work ‘off-site’ – say when driving – may find it particularly difficult to know the exact movements of their employees during their working hours. Improvements in technology have, however, made employee accountability in the workplace much easier in recent years. Again, industries which rely on employees driving vehicles may find this kind of technology particularly useful. GPS, for instance, highlights if drivers are deviating from their planned routes or if there is traffic preventing them from reaching their destination.

If employers do intend to monitor vehicles they should ensure that they provide a policy which sets out the nature and extent of the monitoring. Employers should satisfy themselves that their employees are aware of the policy that is in place, what information is recorded and the purpose for that recording. Where the vehicle is used for both private and business use employers, should be particularly wary, as monitoring movements when the vehicle is being used privately will rarely (if ever) be justified.

CONCLUSION
Monitoring employees can take place in a variety of ways and employers should carefully consider which form of monitoring is necessary for their business, without being unnecessarily intrusive to the privacy of staff. Carrying out impact assessments are often a useful way of determining whether the monitoring is truly justifiable.

Case law such as Bărbulescu v Romania clearly demonstrates that the courts take the privacy of staff in the workplace very seriously. In order to reduce the risk of employee complaints, employers should try to be transparent and honest with employees about monitoring which they may be subject to.

Getting employee monitoring wrong can have a significant impact. Employers could face discrimination complaints or employees resigning and claiming constructive dismissal. Employees could argue that their rights under the Data Protection Act 1998 – or even the Human Rights Act 1998 – have been infringed. In addition to the cost and time associated with defending a claim, an employer could be found liable by a court, employment tribunal or the Information Commissioner’s Office, and ordered to pay compensation.

Posted in CAT Know-How, Factor & Supplier News, Garage News, News, Retailer NewsComments (0)

VLS RECEIVES 50TH CASE

VLS RECEIVES 50TH CASE

As the Verification of Lubricant Specifications receives its 50th case complaint, the Director reviews the cases it has investigated so far

VLS was formed in 2013, when the industry faced a real problem. Lubricant products were being sold by some new market entrants with claims that just did not seem to be believable. Closer inspection found that occasionally sub- standard formulations provided by newly-established companies were being passed off as the latest specifications to their customers, or even failing to perform effectively at low temperatures.

Even though the majority of lubricants were compliant with relevant market standards and manufacturer approvals, out of this concern reputable lubricant blenders and manufacturers came together to launch the Verification of Lubricant Specifications (VLS), an industry-led service that independently validates complaints regarding the technical specifications and performance claims of products.

Four years on, VLS has tackled 50 cases, receiving its 50th complaint in September this year. Looking back over the cases so far presents some interesting reading.

MISLEADING CLAIMS
The first case was received in March 2014. The complaint related to an engine oil which was making unrealistic claims that did not comply with ACEA sequences for which it was claimed to be suitable. At the time, VLS was still relatively new and people did not know what to expect. The company involved soon saw that it meant business as the case was escalated to Trading Standards and the company suspended from membership of the United Kingdom Lubricants Association (UKLA) until the matter was resolved.

Non-compliance with ACEA has accounted for the majority (60 percent) of cases. These engine oil sequences change every four years to take account of developments in emission regulations and technical developments in OEM engine design. Lubricant marketers need to manage their stockholding to ensure they are not left with old stock on the shelves when the new sequences become mandatory. VLS cases have shown that they will get reported, investigated and required to withdraw mislabelled stock if necessary.

COLD WEATHER
Around a quarter of cases have related to low temperature properties, which is a particular safety issue. In one case a lubricant was found to turn solid at temperatures of minus 40 degrees centigrade. Whilst the temperature in some parts of the country rarely stays below freezing for a sustained length of time, in Scotland, extreme temperatures are not uncommon. To be within specification, lubricants must be able to perform even in these extreme conditions to avoid damage to vehicles.

OIL TYPES
Of the cases investigated three quarters have related to passenger vehicle engine oils. This is in line with expectations, as automotive comprises a significant sector in the marketplace, as much as half of all lubricants sold. However, VLS’ remit does include everything from engine to transmission and gear oil and all have featured in cases. Seven cases of automotive gear oils with suspected low temperature properties have been investigated. Cases have also been reported in automotive transmission fluids and hydraulic fluids. VLS has even investigated agricultural tractor oil. So far only two cases have been received relating to industrial products and one in the marine sector. VLS plans to focus on raising awareness in this sector as well.

AFTERMARKET AND BEYOND

Over the course of 2017 the number of cases brought to the attention of the organisation has reduced as the initial issues of non-compliance have been tackled in the wider lubricant marketplace. There is now a greater awareness amongst marketers and blenders as to what constitutes a compliant product.

We know this because blenders report that there is a greater degree of compliance in the market place, additive companies tell us that they are engaging with companies that they have not had a relationship with previously, and European body ATIEL has also begun its own programme of policing conformity.

If you have any concerns about lubricant products then you can report them to VLS by calling 01442 875922 or emailing admin@ukla-vls.org. uk. VLS handles all cases anonymously through a clearly defined process which includes technical review by a panel of experts from across the industry and dialogue with the manufacturer and all relevant parties to work together to resolve any issues.

You can find out more about VLS by visiting their website: www.ukla-vls.org.uk or calling 01442 875922.

Posted in CAT Know-How, Factor & Supplier News, Garage News, News, Retailer NewsComments (0)

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