Motor vehicles consignment sales reform
A review of the regulation of consignment sales under the Motor Vehicle Dealers Act 1973 (WA) has been completed by Consumer Protection.
The key purpose of the review was to consider whether the regulation of consignment sales should continue in its current form.
A combined review of the Motor Vehicle Dealers Act 1973 (WA) (MVDA) and the Motor Vehicle Repairers Act 2003 (WA) (MVRA) identified sale of vehicles by consignment as an area of significant risk to consumers. Following the review, there were further incidents involving motor vehicle dealers selling on consignment that resulted in consumers suffering serious financial detriment and loss.
In light of these losses, this review undertook to examine whether further regulatory intervention was required, including the possibility of banning consignment selling of vehicles, an option suggested by some sectors of the industry.
This review found a significant section of the motor vehicle sales industry relies on consignment selling, and this method of selling should be retained, but there remains scope for a number of regulatory reforms.
As a result, the final report in the form of a Decision Regulatory Impact Statement (DRIS) recommends some key reforms. The proposals were agreed to by the Minister in February 2022.
The DRIS outlines the issues raised during the review, reports on stakeholder input to the review, assesses options for change, and makes recommendations for reform.
These key reforms are:
- Introduce a new category of dealer’s licence relating to consignment sales.
- Update the motor vehicle dealers licensing course to improve training on consignment selling.
- Apply additional good character and “fit and proper person” licensing criteria for dealers who engage in consignment selling (including assessment of an applicant’s close associates).
The review recommendations are aimed at:
- Providing a more effective method of regulating consignment selling activities and promoting greater clarity throughout industry.
- Improving the level of understanding by dealers of the requirements for dealing in consignment sales.
- Reducing risk to consumers by amending the MVDA to include additional “good character”, and “fit and proper” person criteria relating to the associates of an applicant for a dealer’s licence to enable the fitness of close associates to be considered as part of the dealer’s licence.
It is acknowledged that the proposed changes to the regulation of consignment sales will impact on consignment dealers and the broader motor industry. The recommendations aim to provide a more effective regulatory regime at minimal increased cost to industry.
Work on implementing the key reforms will continue in 2022.
The DRIS represents the final stage of the review. The first stage included inviting feedback on a consultation paper known as a Consultation Regulatory Impact Statement (CRIS).
In response to the CRIS, Consumer Protection received a total of eight submissions and 17 people answered the online survey.
The CRIS sought industry and consumer feedback on three options for reform:
- Option A – No change (retain the status quo).
- Option B – Strengthen existing licensing eligibility provisions and training of motor vehicle dealers in relation to the consignment selling of vehicles.
- Option C – Ban the consignment selling of vehicles by motor vehicle dealers.
During consideration of industry and consumer feedback and responses, Consumer Protection proposed an amended version of Option B be implemented.
On 10 December 2021, the final report was certified by the Department of Treasury’s Better Regulation Unit as complying with the Government’s Regulatory Impact Assessment Guidelines.
Government approval will be sought to introduce amendments to the legislation to Parliament.
Downloads and resources:
- Motor Vehicle Consignment Sales DRIS Better Regulation Unit (BRU) Certificate
- Decision Regulatory Impact Statement: Regulation of Motor Vehicle Consignment Sales
- Decision Regulatory Impact Statement: Review of the Motor Vehicle Dealers Act 1973 and the Motor Vehicle Repairers Act 2003 (final report) July 2019
- Motor Vehicles Act 1973 (WA)
- Application to appoint an auditor for motor vehicle dealers selling on consignment
- Consignment trust account for a motor vehicle dealer
- Consignment trust account handbook: Motor vehicle dealers
- Motor vehicle dealer licences
- Request to remove consignment sales condition (motor vehicles)
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