The Society of Motor Manufacturers and Traders is the first industry body to graduate from the Office of Fair Trading’s Consumer Code Approval Scheme. We look at the advertising bits of the SMMT New Car Code and ask if it was all worth it.
Who: The Society of Motor Manufacturers and Traders ("SMMT") and the Office of Fair Trading
When: Autumn 2004
The 'New Car Code of Practice' of the Society of Motor Manufacturers and Traders ("Code") became the first industry body Code to successfully complete both stages of the Office of Fair Trading's Consumer Codes Approval Scheme.
This Scheme is designed to maximise self regulation within industry and those that pass through its qualifying stages are entitled to use an "OFT Approved Code" logo.
Completing Stage One means that the Code has met with the OFT's core criteria, which aim to ensure that industry codes of practice will be effective in promoting and safeguarding consumer interests. The second and final stage of the process of getting approval involves testing the Code to see whether it is working in practice.
The Code includes an "Advertising" section and the document as a whole sets out the standards that vehicle manufacturers are required to comply with regarding new car sales, new car warranties, availability of replacement parts, advertising and complaints handling. The Code details promises given by vehicle manufacturers and contains guidance to assist the consumer.
The SMMT Regulation and Compliance Unit ('RCU') is the Code monitoring body and is therefore responsible for ensuring that manufacturers are acting responsibly and fulfilling their Code obligations. The RCU apparently operates an impartial alternative dispute resolution service and consumers who have a complaint are encouraged to follow given guidance, although none of this appears to relate to complaints in respect of advertising.
Codes' advertising provisions
Turning to the advertising section of the Code this is concise. It starts with 'Our advertising promise' which reads 'It is our intention to use advertising as a means of promotion only'. Hmmm….
There are then 8 sub categories of what this promise means for buyers.
The first promise is that advertisements, promotions or any other publication whether in writing or otherwise, will not contain any items which are likely to mislead or be misunderstood.
The second pledge is that such material will comply with all relevant laws and codes.
The third pledge is that any comparison made within advertisements with other models of different manufacturers will be based upon a similar set of criteria, which will not confuse or mislead the consumer.
Fourthly, it is stated that where advertisements quote 'the price of one model in any model range but depict another, the actual price of that other model will also be clearly shown. "
The fifth pledge is that, in principle, a price should be the "on the road" price at which you can buy the goods and the sixth pledge is that the words "guarantee" or "warranty" in any advertisement will not be used unless the full terms of that warranty are set out clearly within the ad or are available at point of sale. Furthermore, any reference to a warranty or guarantee will not be made if it diminishes consumer rights or appears to do so.
The seventh pledge is that where a rust/corrosion proofing process is advertised, information about the process and its limitations will be made freely available and pledge number eight is that in the unlikely event that any member is convicted of an offence relating to advertisements for a new car, then that member will be deemed to be in breach of the Code.
Why this matters:
When it first launched its Code Approval Scheme in 2002, the OFT identified a number of sectors where there was a particular need for self regulation to be stronger in order to avoid stricter laws. One of these was used cars and although the SMMT Code focuses on new cars, this is at least a step in the right direction.
On advertising Code adds little and potentially subtracts
So far as car advertising is concerned it has to be said that the Code adds very little to existing applicable laws and codes and potentially detracts from the current system by causing potential confusion, for example as to whether the SMMT or the Advertising Standards Authority (which adjudicates on alleged breaches of the CAP Code covering non broadcast ads in the UK) is the proper body to adjudicate on new car ads. Clearly this is the ASA but consumers may not be so clear on the point.
Whither the OFT Code Approval Scheme?
A final aspect is that if this is the first code to obtain OFT approval under the scheme announced with such fanfare three years ago, where is this scheme going, is it worth proceeding with, does anybody out there know about it, will consumers be able to differentiate the OFT Approved logo from the plethora of other accreditation scheme logos and was it all worth it for the SMMT or just an exercise in self justification?
Rumour has it that there will be an official, OFT-assisted launch of the SMMT Code in early December. We suspect it will need an awful lot of publicity and many more industries to follow the SMMT's lead very soon if the OFT's scheme is to become more than Government inspired, consumerist hot air.