Brexit is affecting almost every aspect of life in the UK. As the UK’s post-Brexit plans and regulations are refined, many less-obvious changes, like product regulations, are slipping under the mainstream media’s radar.
Product safety law should be one area of concern for many online retailers that import and sell products to and from the European Union. Once the formal transition period ends in December 2020, many UK businesses will find themselves newly exposed to liability for defective products they sell or import.
The current rules on product safety are defined by two main pieces of legislation, Consumer Protection Act 1987 (CPA) and the General Product Safety Regulations 2005 (GPSR).
The CPA and GPSR impose a range of duties on manufacturers, importers, distributors and retailers regarding product safety:
If a member of the public is injured or their property is damaged by a defective product, the legislation also imposes strict liability on the manufacturer or importer of that product into the EU. Strict liability makes it easier for consumers to make a claim against an importer or manufacturer, even if the company was unaware of the defect and they carried out appropriate safety checks.
Retailers that sell EU products within the EU are not currently affected by this strict liability (unless the products are ‘own brand’). However, post-Brexit regulations are about to significantly change which businesses in the supply chain are exposed to defective product claims.
The impact of the biggest change may not be obvious, but it is fundamental. With the new border between the UK and the European Union, strict liability for defective products now applies to businesses importing and selling across that border.
Chris Salmon, Director of Quittance said, ”Before Brexit, if you imported from an EU-based supplier or manufacturer into the UK, you would not be affected by the strict liability rules. You still could be sued for selling a defective product, but the injured person would have to prove you were negligent.”
“Under the changes, importing into the UK from the EU means that an injured claimant could take legal action against your business without needing to prove negligence. The same may be true if you continue to sell from the UK to EU customers.”
The increased exposure to product liability could make it easier for an injured claimant to win a defective product claim against your business. Many online retailers will need to update their product liability insurance to ensure their business remains protected from the financial impact of such a claim.
The new rules are coming into force on 1st January 2021.
However, there will be a transitional period to accommodate the switchover from the EU’s CE safety mark to the UK’s new safety mark. The details of the UK’s new product recall mechanism are also still being finalised, so retailers should consider following the guidance of EU bodies regarding product recalls until the UK system is fully operational.
Although the practical details of what is considered a ‘safe’ product will not change on day one, retailers should expect the UK’s rules to diverge from the EU’s in the future.
Now is a very good time to audit your exposure to product liability issues. One way to approach this audit is to break down your exposure into three areas:
When auditing your suppliers, the key points to consider include:
Under the product safety regulations, you are not expected to carry out a forensic examination of every aspect of your suppliers’ businesses. You just need to carry out “reasonable” checks. This may include whether they are certified by applicable industry bodies or regulators.
What is considered “reasonable” will depend on the likely consequences of a product defect. Pharmaceuticals are likely to be more harmful than homewares, and so an online pharmacy is held to stricter standards than a site selling soft furnishings.
Credit checks are commonly used by suppliers to assess the stability of a retailer. A credit check is also a useful tool for retailers to assess suppliers. A credit check alone won’t tell you whether a supplier’s products are safe, but it will give you valuable intel about the history of the company and its directors. Is the credit check consistent with what you’ve been told about the company? Where is the company formally registered?
Once the law changes in January 2021, your exposure to liability may be affected by the location of your suppliers.
If your suppliers are based in the EU, and you sell their products to the UK market, you will be caught by the changes and will now be held liable for defective products. Likewise, if your suppliers are UK-based and you sell to both UK and EU customers, you would now be liable under EU regulations.
In either case, you should carefully consider your liability for defective products and update your business insurance to account for any increased exposure.
If you do import or sell products across the new UK-EU border, you will also need to ensure you stay up to date about any regulatory changes in both jurisdictions.
The level of detail you will need to apply to a product safety audit will depend on the level of likely harm.
Unless specific regulations or standards say otherwise, an inherently less-dangerous product, like a pillow case or book, will require fewer checks than a power tool or chemical cleaning product.
As a starting point, you could consider the following:
You should consider contacting your local trading standards office, or a suitable industry body, for specific guidance regarding product safety.
Aside from auditing your suppliers and products, you should also assess your business in more general safety terms:
As above, organisations like Trading Standards will be able to provide you with more specific advice regarding product safety compliance.
The rules are still in flux. Although we know what the most impactful changes will be in January 2021, there are still unknowns. In particular, the new regime for UK-specific product safety recalls is yet to be announced.
More generally, now that the UK is unfettered from EU regulations, many businesses will need to stay up to date regarding two sets of safety rules. A trade agreement may restrict major differences between the UK and EU’s safety rules, but there is still the potential for retailers to be caught out.
To give yourself the best chance of protecting your business and your customers from avoidable harm, you should check product safety rules on a regular basis, and plan for additional audits as required. If you regularly change suppliers or product lines, or sell more-hazardous products, you may need more regular checks.
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