Motor Vehicle Information Disclosure | Review of the Operation of the Motor Vehicle Sales Act 2003: Report Presented to the House of Representatives Pursuant to Section 163 of the Motor Vehicle Sales Act 2003

Review of the Operation of the Motor Vehicle Sales Act 2003: Report Presented to the House of Representatives Pursuant to Section 163 of the Motor Vehicle Sales Act 2003

Motor Vehicle Information Disclosure

Within this page …

Supplier Information Notice (SIN)
Key Elements of the Information Disclosure Regime
Implementation
Assessment against the Consumer Information Disclosure Objectives
Specific Issues
Concluding Comments on Motor Vehicle Information Disclosure
Recommended Amendments to the MVSA in Relation to Information Disclosure
Recommended Amendments to the Consumer Information Standards (Used Motor Vehicles) Regulations 2003
- Review of the Supplier Information Notice
- Exemption from Requirements to Provide a SIN When Transactions Are Exclusively between Registered Traders and Car Wreckers

Supplier Information Notice (SIN)

133. The strategic aim of the information disclosure regime is to enable consumers to make informed decisions in relation to their purchases of used motor vehicles. It is expected that this can be achieved through the provision of

Key Elements of the Information Disclosure Regime

134. The information disclosure requirements are commonly referred to as the Supplier Information Notice (SIN). The relevant provisions in the legislation are sections 14 to 18, and sections 101 to 102 of the MVSA and the Consumer Information Standards (Used Motor Vehicles) Regulations 2003 made under the Fair Trading Act 1986. The New Zealand Commerce Commission is charged with responsibility for enforcing the SIN.

Vehicle Details Must Be Provided

135. The SIN relates to used motor vehicles only and contains detailed information about the particular motor vehicle offered for sale as well as general consumer information relevant to motor vehicle purchases. The vehicle information relates to details about the vehicle's age, usage, make and model, whether another person has a security interest in it, etc. A sample notice which is provided on the Ministry of Consumer Affairs website is attached as Appendix Three.

Traders Responsibility to Provide SIN

136. A SIN must be attached to all used motor vehicles that are offered or displayed for sale by a motor vehicle trader, or by persons selling through a car market operator. When motor vehicles are physically displayed for sale, the SIN must be attached to the vehicle in a prominent position that makes it clearly visible from the exterior of the vehicle. When the avenue for sale or display is via the internet and a contract for sale may be entered into on the internet, the SIN (or access to it, for example, through a hypertext link) must be clearly and prominently displayed on the same web page as the offer or display, and the contract for sale relating to that vehicle.

Acknowledgement of SIN to Be Obtained

137. Where a motor vehicle trader is a party to, or acts as an agent for a party to a contract for sale, that motor vehicle trader must obtain a written acknowledgement that the buyer has received a copy of the SIN. This must be obtained immediately before the sale of the vehicle, or in the case of a car auctioneer as soon as practicable after the sale.

Records to Be Kept

138. A copy of the SIN and its acknowledgement must be kept for 6 years and be made available for inspection on request of the Registrar.

Penalties and Offences

139. Failure to comply with the requirement to provide a SIN and the information required in the SIN is a breach of section 28 of the Fair Trading Act 1986 and attracts a maximum fine of $60,000 for individuals and $200,000 for companies. Failure by a car market operator to take reasonable steps to ensure that a consumer selling through them attaches a SIN, is an offence under the MVSA and attracts a maximum fine of $2,000. This is also an infringement offence.

Implementation

140. The Commerce Commission is the agency responsible for enforcing the Consumer Information Standards (Used Motor Vehicles) Regulations 2003 which establish the SIN requirements. From the data it has provided, it would appear that compliance with the consumer information requirements was initially poor. Recent investigation suggests that compliance has improved, but certain issues remain, as discussed below.

Compliance Activity

141. In July 2004, six months in to the new regime, the Commerce Commission inspected 89 premises in Auckland, Wellington and Christchurch and reported significant non-compliance through either failure to display the SIN, or displaying incomplete information on the SIN.

142. From July 2004 to June 2005 inspections were conducted around the country, with degrees of non-compliance ranging from incorrect formats and incomplete information through to inaccurate vehicle prices. These types of non-compliance resulted in consumers being given inaccurate information about the price of the vehicle. They were also hindered from being easily able to make comparisons among vehicles. In total, 101 warning and compliance advice letters were issued during the year and two cases were approved for prosecution in relation to the failure to display SINs, for failing to provide buyers of used motor vehicles with copies of the SIN, and for not obtaining written acknowledgements from buyers that they had received copies of the SIN.

143. Inspections were also carried out of the SINs displayed by cars being offered for sale at car fairs. Guidance was provided to the car fair operators as to the requirements of the Regulations. Initially the level of compliance at these car fairs was low; however, in the two cases where follow-up visits were conducted, the level of compliance was shown to be much improved.

144. In the first quarter of the 2005/2006 financial year, 14 warnings and compliance advice letters were sent. Issues included failure to complete all parts of the SIN (principally the Warrant of Fitness and security interest information), failure to display SINs on used motorcycles and one instance of making a misleading representation that the trader was offering cars for sale as a private individual.

Summary of Activity

145. By December 2005 (after two years of operation of the MVSA), the Commission has received 187 complaints or enquiries about the MVSA. It has undertaken 185 inspections, from which 65 warning notices have been issued, in 79 instances compliance advice has been provided, in 3 cases settlements were negotiated and 1 prosecution was undertaken.

147. Following inspection and enforcement activity by the Commission, the most prevalent issues are now:

Ministry of Consumer Affairs / Citizens Advice Bureaux Monitoring Exercise

148. In the period September 2004 to March 2005, the National Association of Citizens Advice Bureaux and the Ministry of Consumer Affairs undertook a limited monitoring exercise of enquires related to the MVSA. During this period there were 150 enquires. With respect to the SIN, 59 percent (89 people) said a SIN was displayed in cars, 21 percent had no SIN at the time of purchase and the remaining 20 percent could not recall if a SIN was displayed or not. Fifty-two percent said they received a copy of the SIN when they purchased the vehicle, 23 percent did not receive a copy and 25 percent were not aware whether a copy was received or not.

Telephone Survey (Commissioned by Ministry of Consumer Affairs)

149. Between June and August 2005 a telephone survey, commissioned by the Ministry of Consumer Affairs, was conducted, targeting purchasers of used motor vehicles from motor vehicle traders. The survey of 617 people, who had purchased a vehicle in the past 12 months, found four out of five purchasers recalled the SIN being displayed. Just under half recalled signing the SIN. Follow up focus groups to that survey found that people appeared to lack awareness of the purpose of the SIN or the legal requirements associated with the SIN.

Assessment against the Consumer Information Disclosure Objectives

150. In assessing the effectiveness of the information disclosure requirements, it is relevant to note that the new requirements met with some initial scepticism and reluctance from the motor vehicle industry. Consumers had to adjust to the new practice as well.

151. Under the former Motor Vehicle Dealers Act 1975 motor vehicles had to be sold under one of four warranty categories. Each warranty category had a different standard and the window card had to state the category under which the motor vehicle was being sold. These warranty categories were in conflict with the general consumer protection provisions of the Consumer Guarantees Act 1993. The introduction of the MVSA in 2003 removed these warranties and placed warranty issues under the wider scope of the CGA.

152. After a residual resistance both industry and consumers have adjusted to the current regulations. Consumer group responses to the SIN have been largely positive.

Objective: Accurate and Meaningful Information Is Provided

153. In the first year of operation of the MVSA, monitoring activity has shown that SIN display compliance was poor. This could be attributed to the fact it was the initial education phase where motor vehicle traders were coming to grips with their obligations. More recent investigation has shown that SIN display compliance has improved, providing customers with the required information relating to their purchase.

154. There is a general impression, however, that the levels of compliance vary within different parts of the industry. Traditional traders, particularly those operating from a physical car yard and who are supported through their membership of an industry association, appear more likely to meet the SIN requirements than those trading either through the internet or through car fairs or display for sale operations. If the information disclosure requirements are to be effective, these latter avenues of trading will require closer enforcement attention.

155. Other concerns have been raised which also impact on whether consumers are provided with accurate and meaningful information. The SIN has been variously described as too rigid, inconsistent in its use of yes/no entries (or requiring the entries to be left blank), and confusing where there are also associated date entry requirements. Specific examples include:

Warrant of Fitness

156. The SIN requires that it be noted (by a Yes/No entry) whether a Warrant or Certificate of Fitness (WoF) exists or not. The actual expiry date must also be noted. Often a WoF will expire whilst being displayed for sale on a car yard or waiting for auction. This means that the SIN must be updated. On larger car yards this can be an onerous compliance cost.

157. Under Land Transport Rules the WoF must be displayed on the window screen of any motor vehicle. It is further required that a WoF be no more than 28 days old at point of sale. This is important consumer information about which the SIN is silent.

158. The current requirements relating to the WoF therefore do not appear to be meeting the needs of either the industry or consumers. Consideration needs to be given to finding a more effective means of providing the relevant details and obligations that attach to the WoF.

Vehicle Registration and Vehicle Licence

159. Confusion has arisen as to the meanings of "registration" and "licence" and their placement together on the SIN. Registration refers to the registration for the vehicle on the Motor Vehicle Register which utilises the Vehicle Identification Number (VIN) of the vehicle. Licensing a motor vehicle is obtaining licence plates and thus the right to drive the vehicle on the road and is commonly referred to by the public as "registration". This causes confusion when the two words are placed together on the SIN.

160. It is common for vehicles to be auctioned with a current registration but no current licence. A consumer on viewing that the SIN has been ticked "yes" indicating that the vehicle is registered may also assume that the vehicle has a current licence. This is regardless of the date of licence expiration being noted in the same panel. Consideration needs to be given to finding a way of avoiding possible confusion.

Cash Price

161. There is concern that the cash price, as required on the SIN, excludes what are referred to as "on road costs" (for instance, licensing the vehicle, or registering it in the case of a new import) and this is potentially misleading for consumers. Industry has recommended that an additional "on road costs" panel be introduced to the SIN (this is similar to the inclusive or exclusive of GST stated approach often taken when advertising a product for sale).

162. Most consumers expect the cash price to include all on road costs. It is considered that the cash price should be, wherever possible, the total costs of the vehicle. Where these cannot be stated, for example at auction, any additional charges that will be payable should be clearly indicated.

163. There is a further issue here for cars sold at auction. Consumers prefer to see an indicative price of the vehicle that it may go for at auction. An entry in the cash price field noting such a price is not currently allowed. Consideration needs to be given to find a way to provide for this information to be displayed.

Notice Title

164. The purpose of the SIN is to provide individual vehicle details to consumers and on the reverse side there is general consumer protection advice relating to buying a used motor vehicle. The legislative instrument is called a Consumer Information Standard. However the Notice itself is called the Supplier Information Notice. This can cause confusion for the consumer.

165. SIN confusion is compounded further as the vehicle details page makes reference to both "you" as the supplier, and "you" as the buyer of the vehicle. Both of these issues need to be addressed.

Features and Additional Information Facility

166. There is demand from motor vehicle traders and consumers to have additional information such as features and accessories as well as information about the number of owners on the SIN. Presently including such information on the SIN is not permitted, but it may be supplied on a supplementary form.

167. When the SIN form was originally developed, the required motor vehicle details were limited to those that could be independently verified and were meaningful in regard to the basic performance attributes of the vehicle. There were concerns that "sale" features would be given greater prominence on the SIN and that this would detract from details that were more meaningful, even if less attractive, to the buyer.

168. It appears that consumers still value this information and are prepared to make their own judgements as to its merit. Concerns about visibility of prescribed information could be dealt with by a simple requirement that such information is given prominence.

169. Consideration should be given to allowing additional information such as features and accessories, and previous owners, to be placed on the SIN.

170. In terms of whether the SIN provides accurate and meaningful information, responses from consumer groups and industry are extremely varied regarding the success of the SIN. There are parties in both groups that support the SIN and would like to see it continue (with minor amendments) for a longer period so that its effectiveness can be properly measured. On the other hand, there are parties in both groups that consider that the SIN does not give consumers all the information that they want, is difficult for consumers to read and is confusing. Some of the information, such as the Personal Property Securities Register (PPSR) free phone number has become outdated and is therefore no longer helpful (this is discussed below in more detail).

171. Recommendation: It is recommended that a comprehensive review of the information requirements and the form in which the information be provided as set out in Schedules I and II of the Regulations be undertaken.

Objective: Buyer Has Clear Title When Existing Prior Claims Are Not Disclosed

172. Every year there are over 250,000 debts registered on vehicles. At any one time there could be 255,000 debts hidden on past plates. In addition there are 23,000 vehicles stolen each year and 55,000 illegally sold vehicles each year.[2] These figures suggest there is a large part of the used vehicle market that involves the sale of vehicles with security interests.

173. A motor vehicle trader must disclose on the SIN if there is a registered security interest over the motor vehicle. If a security interest exists and it is not disclosed on the SIN any liability for that interest is assumed by the motor vehicle trader. The Commerce Commission has reported one instance of failure to disclose a security interest and one claim before the Motor Vehicle Disputes Tribunal centred on this issue.

174. Rights to clear title appear to be well established. However, confusion may arise with regard to the security interest panel on the SIN. If no security interest is vested in the motor vehicle this panel must currently remain empty. This lack of direction can be confusing. For the sake of clarity, the panel should state either that there is or there is not a security interest over the vehicle. A statement recorded in this panel would be unequivocal as to the security interest status of the vehicle.

175. A further issue has arisen with the PPSR information provided in the consumer information section of the SIN. This section directs consumers to use a free phone number which implies that it can be rung to determine if there is a security interest over the vehicle. Such a service is not actually provided by this number. It is more of a general information service regarding the PPSR.

176. In addition, the email address info@ppsr.govt.nz is being wound down and the PPSR website is currently being enhanced. Thus, the most appropriate contact address to remain on the on the reverse of the SIN is the website address (www.ppsr.govt.nz). This site explains how the PPSR can identify any security interest, how to register as a user, and how to carry out the search. There is a function on the website homepage where the user is able to ask questions.

Objective: Consumers Are Provided with Information about Their Rights and Know How and Where to Seek Redress

177. Many of the factors which will help to ensure that this objective is achieved have already been discussed. Consumers must first be provided with the SIN and the information contained in the SIN must meet consumer needs. Ironically, in the consumer awareness survey commissioned by the Ministry of Consumer Affairs, the consumer protection information that must be provided on the back of the SIN has been likened to "the fine print" of a contract and therefore mostly ignored.

178. As noted earlier in the discussion of the registration regime, the number of agencies involved in administering and enforcing the MVSA and related motor vehicle matters has the potential to confuse consumers and prevent them pursuing the redress to which they may be entitled. The provision of four different contact points in the consumer information section of the SIN illustrates this fragmentation.

179. The security interest consumer information section, discussed above, also highlights the difficulty of prescribing set information where that information is subject to change. This is particularly relevant when the information relates to the activities of other agencies that are not the administering agency for the particular regulations. If the information is to be helpful it must also be up to date. However, every time the information is changed this would need to be reflected in a change to the regulations and impose additional compliance costs on business.

180. This discussion reiterates the need for consideration to be given to establishing one central contact point for consumers, which could deal with general enquiries across a range of motor vehicle issues and ensure that consumers were then directed, if need be, to the appropriate agency. The general consumer information provided on the SIN could be limited to the information about security interest required under section 15 of the MVSA and the contact details for a central consumer information point.

Objective: Documentary Evidence of the Transaction Is Available in the Event of a Dispute

181. The SIN is required to be retained for a period of 6 years after the sale as documentary evidence of the sale. This is particularly important when an encumbered vehicle is being sold for future evidentiary purposes. The Ministry has seen no evidence to suggest if this requirement is being followed or not.

182. Given that the consumer focus groups survey found that 4 out of 5 people did not recall seeing a SIN and that only one in two actually signed a copy of the SIN card, it would suggest that compliance with the need to display and retain and give a copy of the SIN to the purchaser is not being followed.

Specific Issues

183. Additional information disclosure issues identified, including those raised in submissions and discussions, not previously addressed, are now discussed.

Vehicle Year

184. There is a potential issue arising from an incompatibility between the Motor Vehicle Register protocols and the SIN requirements in respect of data capture of "vehicle year" on the Register. The Register is run by Land Transport New Zealand.

185. The SIN requirements came into effect on 15 December 2003 and provide that the definition of "vehicle year" is either the "Year of Manufacture" (YOM) or "Model Year" (MY) as recorded on the Motor Vehicle Register. YOM and/or MY, was considered to provide additional information as to the age of the vehicle and the standards to which it had been manufactured. A separate entry for "Year of First Registration" (YOFR) was maintained as this gave information as to the years of use of the vehicle. These additional pieces of information were considered necessary given the inability in many instances to confirm the accuracy of the odometer reading of the vehicle.

186. Prior to December 2003, industry convention followed that where a YOM or MY, was unable to be determined, the "Year of First Registration" (YOFR) was used. This is a particularly common practice with Japanese imports due to difficulties in obtaining data from the Japanese motor industry. Therefore motor vehicles that were entered onto the Motor Vehicle Register prior to December 2003 but have since been placed on the market may have any one of the three dates entered into the vehicle year field.

187. The Ministry of Transport is currently exploring ways of resolving this situation. That will likely require an amendment to the regulations.

188. The Ministry of Consumer Affairs is maintaining close liaison with the Ministry of Transport.

Car Market Operations (Car Fairs, Display for Sale Operations and Internet Sales)

189. Selling used motor vehicles by way of car fairs, display for sale operations and over the internet has become a common feature of the New Zealand used motor vehicles sales market. An important aspect of these avenues for sale is that they are used by both private individuals selling their cars and by motor vehicle traders.

190. Vehicles offered for private sale or by a trader in the course of business may be displayed side by side and there is often little to alert consumers buying in these circumstances whether they are engaged in a private sale between individuals or whether they are purchasing from a trader. It is important that this distinction is made because if things go wrong in the transaction, the remedies that may be available to the buyer are different for private sales than for sales made by traders. Private sales tend to be a "buyer beware" situation in which, if things go wrong, the buyer has no rights under the Consumer Guarantees or Fair Trading Acts (although they may have some recourse to common and civil law remedies). Where sales are made through a trader, however, these Acts have full effect and the buyer may also take a claim to the Motor Vehicle Disputes Tribunal.

191. Both industry and consumer representatives have expressed concern that some traders selling through car fairs and on the internet may be attempting to evade their obligations under the MVSA by giving the impression that they are making private sales. Examples of such activity include trading activity by unregistered motor vehicle traders (against whom Consumer Guarantees Act claims can be made) and the use of the trader's individual name rather than the name of the car dealership thereby suggesting a private sale rather than one conducted in trade.

192. Compliance in this area is important and enforcement activity should be targeted here to ensure the effectiveness of the regime. It needs to be noted, however, that car fair and display for sale operations are generally conducted on the weekend and that to strengthen enforcement here may have funding implications.

Obligations Placed on Car Market Operators

193. The obligations placed on car market operators with regard to the SIN are worded differently in the MVSA than in the regulations. This has given rise to some confusion as to the exact nature of those obligations and how they apply, particularly with regard to internet sales.

194. A car market operator under the MVSA means a person who carries on the business of providing any premises or place for a market for the sale by other persons of used motor vehicles or who operates any facility (for example an internet web page) for the primary purpose of facilitating the sale of used motor vehicles (which sale is completed through, or by means of, that facility). A car market operator includes a person who is commonly referred to in the motor vehicle trading industry as a car fair operator or a display for sale operator. A car market operator is deemed to be a motor vehicle trader and must be registered.

195. Section 14 of the MVSA focuses primarily on the situation where the vehicle can be physically examined and the SIN can be physically attached. It requires that a motor vehicle trader must ensure that all used motor vehicles offered for sale through them, have a SIN prominently attached to the vehicle.

196. This responsibility is lessened, to some degree, when a consumer is offering a vehicle for sale through a car market operator. Section 14(2) provides that in this situation the car market operator must "take reasonable steps" to ensure that consumers selling through them, attach the SIN to the motor vehicle in a prominent position.

197. For car fair operators and display for sale operations the nature of the obligations are clear. What constitutes taking "reasonable steps" is less clear and there is concern that this provides an avenue for exploitation by unscrupulous traders.

198. With regard to internet sales the nature of the obligations are also unclear. As noted, a car market operator is also a person "who operates any facility (for example, an Internet web page) for the primary purpose of facilitating the sale of used motor vehicles (which sale is completed through, or by means of, that facility)".

199. Section 14 of the MVSA requires the car market operator to provide a SIN but is silent as to how this should be done in regard to an internet sale. Section 6(2) of the Consumer Information Standard (Used Motor Vehicle) Regulations 2003 sets out that if a used motor vehicle is offered or displayed for sale on the internet and a contract for sale in relation to that motor vehicle may be entered into on the internet then the SIN, or access to the SIN (for example through a hypertext link) relating to that vehicle must be clearly and prominently displayed on the same internet web page as the offer or display for sale and the contract for sale that may be entered into in relation to that vehicle.

200. It further provides that the SIN must be attached by the motor vehicle trader who offers or displays the motor vehicle for sale or by the person who offers or displays the motor vehicle for sale through a car market operator. But it is silent as to the requirement for a car market operator to take reasonable steps in the case of a consumer offering a vehicle for sale through a car market operator.

201. There are several New Zealand based internet sites that facilitate the sale of used motor vehicles. There are over 300 motor vehicle sales per day via one internet car market operator alone, nearly 110,000 per year. While this operator does advise in their terms and conditions that a seller is required to display a SIN, it appears many other New Zealand auction sites do not give such advice.

202. A limited Ministry examination of New Zealand internet sites (that would most likely meet the definition of a car market operator) suggests that it is common practice for the SIN to not be displayed either on the web page or even physically attached to the vehicle itself (judging by photos of the vehicles displayed on such sites). This is regardless of whether the seller is a consumer conducting a private sale or a motor vehicle trader engaging in the business of trade.

203. There is cause for concern here. It is in the interest of consumers that in venues where sales of motor vehicles may be either private sales or sales by a motor vehicle trader, that the type of sale is clearly indicated. The SIN provides a tool for making this distinction and ensures that the consumer making a decision in this arena has access to the same kind of information on all the vehicles on display. The private individual selling through these venues is also availing themselves of the benefit of a market type venue. It should not therefore be considered an onerous burden for them to be required to provide basic information about their motor vehicle, and for those who carry on the business of facilitating such sales to ensure that this information is provided.

204. Recommendation: It is recommended that section 14 of the MVSA be clarified as to the responsibilities placed on car market operators with regard to providing the SIN, in particular in relation to internet sales and that consideration be given to removing the section 14 (2) provision that requires car market operators only to take reasonable steps to ensure that a consumer provides a SIN, thereby strengthening car market operators responsibility in this area.

Imported as a Damaged Vehicle

205. The SIN has an "imported as damaged vehicle" panel. Land Transport New Zealand records whether or not the vehicle had obvious structural damage or deterioration at the time of import and this is flagged to the vehicle. The extent of damage is not recorded and the SIN only notes if the vehicle was flagged as a damaged vehicle.

206. An industry perspective is that the flag does not identify whether the damage is (was) major or minor and that it should not therefore be used as a "definitive categorisation of the vehicle as structurally damaged or incorrectly repaired". It is suggested that consumers will not give proper consideration to cars with such a flag, believing the car to have major damage when in fact a simple repair may have been affected. Further, in any private sale such a disclosure is not made and this creates an uneven playing field for sellers of used motor vehicles. A car may be written off, repaired and put back on the road without the consumer ever realising it.

207. In fact, a flag is retained on the Motor Vehicle Register records only in the case of "obvious structural damage or deterioration of a vehicle". The key word here is "structural", as this determines whether the flag remains on the vehicle or not. Vehicles with damage that is not necessarily structural - such as a minor dent to a door panel - may be flagged initially, but the flag will be removed following subsequent inspection by a Land Transport New Zealand approved entry certifier. No information on the damage will be retained on the record and, therefore, will not be disclosed on the SIN.

208. The damaged vehicle panel on the SIN provides important information for the consumer and should remain. It is acknowledged that this type of information is not made available through private sales and also is not required for vehicles that have been involved in an accident while in use on New Zealand roads. The former situation is generally conducted under the caveat "buyer beware" and the consumer purchasing in this manner does so knowing the risks.

209. In the latter situation, there may be avenues to ensure that this information is made available, such as requiring vehicles that have been structurally damaged to be written off and deregistered. Such vehicles would have to pass the same road worthiness test as imported vehicles before being re-registered and this information would be recorded on the Motor Vehicle Register. These matters fall within the area of vehicle safety and cannot be dealt with further by this report.

Odometer Readings

211. The SIN requires that the correct distance the vehicle has travelled must be on the SIN. If the correct data is not displayed, a statement noting the inability to determine the actual distance travelled must be made.

212. There is industry concern that the requirement to note on the SIN solely the "actual distance the vehicle has travelled" is too strict for certain situations. They point out that there can be legitimate reasons why a vehicle's odometer reading may differ from the vehicle's true mileage. For example, the odometer may have gone around the clock or in manually recording the odometer reading, numbers may have been transposed. They contend, therefore, that in such situations a responsible motor vehicle trader is obliged to note on the SIN that the "vehicle odometer reading may be inaccurate" and that this will give the consumer the impression that there has been tampering with the odometer thus discouraging consumers from buying what could have been a suitable vehicle for purchase.

213. Consumer and industry concerns regarding odometer tampering are widely documented. There are strict penalties for those who tamper with or misrepresent odometer readings. Consumer confidence that an odometer has not been tampered with continues to be vital because, even though a vehicle's mechanical condition may provide a better indicator of its current and likely future capability, many consumers consider the odometer mileage reading as a significant indicator as to a car's condition and factor such information into their purchase decision.

214. It is considered that any variation to the requirement to enter the actual distance travelled on the SIN could create an avenue for misrepresentation of the actual miles travelled. This risk is considered greater than any reason for relaxing the current requirement.

Display Provisions for Motor Cycles

216. Industry has voiced concern that the requirement to display an A4 sized SIN card on motorcycles displayed outdoors is impractical. Whereas the SIN housed inside a car is safe from the weather, a SIN on a motorcycle is not. Motorcycle dealers have been unable to produce a cost effective means of displaying a SIN on the motorcycle which is both water proof and that will not damage the paint finish of the motor cycle in blustery conditions, or blow free of the motorcycle.

217. The problems raised here may be somewhat overstated. The way in which a SIN is displayed for motor cycles should, however, be taken into account in any revision of the consumer information standard.

Powers of Enforcement

218. Persons authorised by the Registrar, or the Police may inspect a trader's records at all reasonable times, upon request (sections 124 to 129 MVSA). The MVSA does not extend these powers to the Commerce Commission which is charged with the enforcement of the information disclosure provisions. The adequacy of the enforcement powers available to the Commerce Commission under the Fair Trading Act 1986 are being examined as part of a Review of the Enforcement and Redress Provisions of Consumer Protection Law, a project currently being conducted by the Ministry of Consumer Affairs.

219. As an interim measure, and without prejudging the recommendations arising from that review, it would seem appropriate that the Registrar and Commerce Commission enter into a formal agreement under which arrangements could be made for the Registrar to authorise the Commission to act on his behalf. More long term solutions could be to amend section 21 of the MVSA to include officers authorised by the Commerce Commission, or to amend the Fair Trading Act 1986 to allow such powers.

220. Recommendation: It is recommended that consideration be given to amending the inspection powers of sections 124 to 129 to also include the Commerce Commission to allow appropriate enforcement of the information provisions of the MVSA (and this should be explored in conjunction with work already in progress regarding similar powers under the Fair Trading Act 1986).

Exemption from SIN Requirements in Transactions Exclusively between Registered Motor Vehicle Traders

221. Currently section 4 of the Consumer Information Standards (Used Motor Vehicle) Regulations which establishes the SIN requirements under the Fair Trading Act 1986 specifically excludes from the regulations, and therefore the requirement to provide and obtain receipt of a SIN, transactions of used motor vehicles that are made exclusively between registered motor vehicle traders. The MVSA does not allow that exemption. There is no consumer benefit in the provision of a SIN in these transactions and to do so imposes unnecessary business compliance costs.

222. The exemption under the Consumer Information Standard should also be extended to include transactions between a registered motor vehicle trader and a car wrecker. This is because the same considerations apply, but under the MVSA definitions, a car wrecker is not treated as a registered motor vehicle trader where the sole business of the wrecker is the wrecking or dismantling of a vehicle.

223. Recommendation: It is recommended that section 14 and section 16 be amended to exempt from the SIN requirements, transactions that are exclusively between registered motor vehicle traders, and between registered motor vehicle traders and car wreckers as defined in the MVSA.

224. Recommendation: It is recommended that the exemption in section 4 of the Consumer Information Standards (Used Motor Vehicles) Regulations 2003 be extended to include transactions between registered motor vehicle dealers and car wreckers as defined in the MVSA.

Concluding Comments on Motor Vehicle Information Disclosure

225. It is considered that the concept of the SIN remains sound. It is an important information tool for providing essential and meaningful details about a particular motor vehicle that a consumer is considering purchasing and is a fundamental means to assisting consumers to transact with confidence.

226. There are concerns, however, that the SIN attempts too much, and in doing so, negates its effect as an effective information resource. Due to its prescriptive nature several issues have arisen with the information required and the form in which it is to be provided. These issues are mainly minor and technical in nature but the way in which the information is currently presented detracts from the value of that information. There are many different viewpoints and concerns regarding the SIN. Proposals to address the concerns raised need to be more fully developed and consulted widely with both industry and consumer interests. An early and comprehensive review of the SIN is, accordingly, recommended.

227. Concerns about compliance with the requirement to display a SIN card are centred mainly in the car fair and internet sectors.

228. Both industry and consumer representatives have urged that enforcement activity be broadened to include those traders who operate solely or in part without physical premises. Consumers would be better protected if the authorities put more effort into policing traders.

Recommended Amendments to the MVSA in Relation to Information Disclosure

Clarification and Tightening of Requirements on Car Market Operators to Provide SIN

It is recommended that section 14 be clarified as to the responsibilities placed on car market operators with regard to providing the SIN, in particular in relation to internet sales and that consideration be given to removing the section 14 (2) provision that requires car market operators only to take reasonable steps to ensure that a consumer provides a SIN, thereby strengthening car market operators responsibility in this area (see discussion paragraphs 193 to 203).

Extension of Inspection Powers to Commerce Commission

It is recommended that consideration be given to amending the inspection powers of sections 124 to 129 to also include the Commerce Commission to allow appropriate enforcement of the information provisions of the MVSA (and this should be explored in conjunction with work already in progress regarding similar powers under the Fair Trading Act 1986) (see discussion paragraphs 218 to 219).

Exemption from Requirements to Provide a SIN When Transactions Are Exclusively between Registered Traders

It is recommended that section 14 and section 16 be amended to exempt from the SIN requirements, transactions that are exclusively between registered motor vehicle traders, and between registered motor vehicle traders and car wreckers as defined in the MVSA (see discussion paragraphs 221 to 222).

Recommended Amendments to the Consumer Information Standards (Used Motor Vehicles) Regulations 2003

Review of the Supplier Information Notice

It is recommended that a comprehensive review of the information requirements and the form in which the information be provided as set out in Schedules I and II of the Regulations be undertaken, commencing early 2006 (see discussion paragraphs 153 to 170).

Exemption from Requirements to Provide a SIN When Transactions Are Exclusively between Registered Traders and Car Wreckers

It is recommended that the exemption in section 4 of the Consumer Information Standards (Used Motor Vehicles) Regulations 2003 be extended to include transactions between registered motor vehicle dealers and car wreckers as defined in the MVSA (see discussion paragraphs 221 to 222).