MOTOR VEHICLE DEALERS BILL SECOND READING SPEECH NOTES

  • Tony Ryall
Justice

I move that the Motor Vehicle Dealers Bill be read a second time.

The purpose of the bill is to continue to maintain protection for consumers, while at the same time simplifying the current procedures for the licensing of motor vehicle dealers.

The bill replaces the Motor Vehicle Dealers Act 1975.

There have been considerable changes in the motor vehicle dealer market in the 23 years since the 1975 Act was passed.

The relaxation of import controls and the axing of tariffs have given the New Zealand public much greater access to a broader range of cars that cost a lot less. Those changes have also opened up market opportunities for motor vehicle dealers.

The last 23 years have also seen the development of a number of statutory reforms such as the Fair Trading Act, the Consumer Guarantees Act, and the Motor Vehicle Securities Act which have provided greater protection for consumers.

Given these enormous changes since the Motor Vehicle Dealers Act was passed in 1975, it is timely that we take another look at the regulatory regime for motor vehicle dealers.

In 1994, an officials committee was set up to review the 1975 Act. In the course of that review, the committee released a discussion paper containing possible proposals for reform to a wide range of consumer and industry groups.

Submissions from these groups were heard and changes to the current regime were recommended.

I would like to briefly outline some of the major changes made by the bill.

Under the current regime, car buyers who have been ripped off take their claims to the Motor Vehicle Dealers Institute. If their claim meets a narrow range of grounds, car buyers are then referred to the Motor Vehicle Disputes Tribunal.

These Tribunals, however, have no jurisdiction to determine disputes involving the application of the Fair Trading Act, nor to determine claims under the Sale of Goods Act or the Consumer Guarantees Act unless both parties agree ? and I have been told that agreement is rarely obtained.

The only alternative for a car buyer under the current regime is to go to the District Court, adding time and money to get redress from the Arthur Daleys of this world.

Under the system proposed by the bill, car buyers will be able to take their claims directly to the Motor Vehicle Disputes Tribunals rather than through the Motor Vehicle Dealers Institute as at present.

The bill widens the jurisdiction of the Disputes Tribunals to allow them to hear disputes under the Sale of Goods Act, the Fair Trading Act and the Consumer Guarantees Act as of right.

For car buyers, these changes will save time and money ? their complaints will be heard under one roof, at a lower cost than going to the District Court.

The bill also replaces the existing licensing regime for motor vehicle dealers with a simplified regime containing specific criteria that applicants must meet.

For example, people with certain convictions under the Crimes Act (such as fraud), the Misuse of Drugs Act or the Fair Trading Act will not be eligible for a license. Neither will people who have been barred from managing a company under the companies legislation.

The licensing process itself is also simplified. The current public notice and objections requirements are complex and costly. These procedures are abolished.

I have been told that under the current system, some 3,500 salespeople take out public notices every year in local newspapers to become licensed salespeople.

Yet, over the last three years, only five objections have been made -- and two of those came from other licensed dealers!

In future, applications for a license will by made to the Registrar of Motor Vehicle Dealers, who will be the Registrar of Companies.

Providing the applicant meets the criteria contained in the bill, a license will be issued as of right to the applicant.

To ensure that accurate information is supplied by people applying for licenses, the bill creates a new offence for any person who gives false information.

The bill also changes the composition of the Disputes Tribunals that car buyers go to. In future the Tribunals will be made up of a chairperson who must be a lawyer and a person who has technical knowledge of the motor vehicle industry.

Currently Tribunals consist of a chairperson, a person representing the interests of consumers and a person representing licensees.

Tribunals are often called upon to deal with both complex legal and technical issues. The new composition of the Tribunals will enable both types of issues to be dealt with effectively.

Under the bill, the Motor Vehicle Dealers Institute will no longer have any statutory functions. Membership of the Institute will therefore become voluntary.

The bill also abolishes the Motor Vehicle Dealers Fidelity Guarantee Fund which is currently administered by the Institute.

As I have already noted, the fund was established under the Motor Vehicle Dealers Act 1975 before a number of important pieces of consumer protection legislation were passed. The protection afforded to consumers by the Fair Trading Act, the Consumer Guarantees Act, and the Motor Vehicle Securities Act have lessened the need for such a strict regulatory regime.

The abolition of the Fidelity Fund will put purchasers of vehicles in the same position as purchasers of other consumer goods. The Tribunals, backed up by the courts, will enforce decisions against the Arthur Daleys.

Getting rid of this fund leaves only one other legislated fidelity fund in existence ? and let's face it, there's probably more lawyers in prison than there are car dealers.

The bill retains the existing requirement for secondhand car dealers to display on the vehicle they are selling a notice that contains certain information about the vehicle. Exactly what information must be displayed will be contained in a consumer information standard prescribed under the Fair Trading Act.

The bill carries forward the existing warranty provisions for secondhand vehicles. However, the specific guarantee of title provision is not retained as provisions in the Consumer Guarantees Act and the Sale of Goods Act already cover the issue of title.

Finally, the penalty for odometer tampering by a licensed motor vehicle dealer has been increased from the current $1,000 -- which is hardly a deterrent -- to a much stiffer maximum fine of $10,000.

Mr Speaker, this bill takes car buying out of the 1970s, and brings it into the 1990s. New Zealanders buying cars will have access to all the consumer protection legislation under one roof, saving time and money.

For the industry, it provides specific criteria on who can be a licensed car dealer, it simplifies a complex registration process, and gets rid of the requirement for taking out public notices -- which in practice accomplished little more than a boost to the coffers of the classified section of newspapers.

It is intended that the bill be referred to the Commerce Select Committee for consideration.

I commend the bill to the House.