Changes to motor vehicle dealers regulations 2021
Changes to pre-estimated liquidated damages
From 1 January 2022, the maximum amount of pre-estimated liquidated damages that a dealer may charge is five per cent.
Information for dealers about the amendments to Regulations under the Motor Vehicle Dealers Act 1973
On 25 September 2021, changes were made to the following regulations:
- Motor Vehicle Dealers (Sales) Regulations 1974;
- Motor Vehicle Dealers (Licensing) Regulations 1974; and
- Motor Vehicle Dealers (Infringements) Regulations 2002.
What do motor vehicle dealers need to do?
Some forms used by dealers have changed. These changes are explained below.
Consumer Protection is aware that dealers may need some time to update their forms to reflect these changes. Compliance officers will be working with the industry as needed to assist them in changing over to the new forms.
Dealers are expected to update their forms as soon as practicable.
Register of transactions
The format of the register has been changed to make it easier for dealers to enter the required information. In the new register format, dealers will only need to enter the name of the registered owner of a vehicle if it is different from the seller. Additionally, the column previously called ‘Remarks’ has been replaced with two columns so the name of the person entering the data and the date it is entered are recorded.
The following forms have been changed to include information about the warranty against defects provided under the Australian Consumer Law. This is mandatory wording required in accordance with Commonwealth laws.
- Form 4 - Vehicle particulars and warranty
- Form 4 – vehicle particulars and warranty (motor cycle)
- Form 5 - Notice of defects excluded from warranty
- Form 6 - Vehicle particulars – no warranty
Are there any other changes that affect motor vehicle dealers?
Previously, there were six categories of motor vehicle dealer licence. This number has now been reduced to four due to the creation of a general category relating to the buying, selling and auctioning of vehicles, instead of having separate categories for motor cycles, and caravans and campervans.
These changes apply to new licence applications and renewals from 25 September 2021. Existing dealer licences remain valid until expiry and no action is required to be taken by dealers. Categories will be updated when a licence is renewed.
A chart of the changes can be found in the PDF above / image below. Descriptions of the previous and current categories can be found on the motor vehicle dealer licence page.
Audits of consignment sales trust accounts
Auditors of trust accounts held by motor vehicle dealers will now need to disclose to the Commissioner for Consumer Protection if they are in a de facto relationship with the dealer. Previously, auditors were only required to disclose if there was a close relationship through blood or marriage.
Why have these changes been made?
These changes are administrative in nature and are intended to streamline processes and reduce costs for industry, consumers and government.
Additional change from 1 January 2022
From 1 January 2022, the maximum amount of pre-estimated liquidated damages listed in the terms and conditions of the vehicle sale contract will be reduced from 15 per cent to five per cent. Dealers may seek pre-estimated liquidated damages where a buyer decides not to proceed with a vehicle sale contract.
What do motor vehicle dealers need to do?
Dealers will need to ensure that all vehicle sale contracts used from 1 January 2022 state that the maximum amount of pre-estimated liquidated damages able to be charged by a dealer is five per cent.
Dealers are reminded that any pre-estimated liquidated damages charged must be a genuine and reasonable assessment of losses they are likely to incur as a result of the sale not proceeding. The maximum amount should not be a dealer’s default position.
What to do you if you need more information
If you have any questions or would like more information about these changes, please contact Consumer Protection on 1300 304 054 or by email.
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