How will Brexit affect product liability regulations?
As the Brexit transition period draws to a close, businesses and retailers must ensure that they are prepared for the regulatory changes surrounding product safety which will come into effect from 1 January 2021.
Until now, much of UK law surrounding product safety has been in line with EU regulations, but once the Brexit transition period is complete on 31 December 2020, new or replacement legislation will come into force. The new rules will have significant implications for businesses when it comes to ensuring product safety and the need to secure appropriate product liability insurance.
These changes to product safety and other regulations will affect all online retailers, particularly those that import into the UK from the EU, and businesses will need to take action promptly.
So what should businesses be aware of as the Brexit transition period comes to an end?
What are the existing laws that protect customers?
Customers are legally entitled to seek compensation if they are injured by a defective product that they have purchased from a UK retailer. The rules apply whether you are a sole trader or an established national brand.
Before Brexit, the two key pieces of legislation that outlined a retailer’s duty of care to its customers were the Consumer Protection Act 1987 and the General Product Safety Regulations 2005:
The Consumer Protection Act 1987 (CPA)
This Act gives people the right to claim compensation against the producer of a defective product if that product causes personal injury or death.
The CPA introduced the principle of strict liability to defective product injury claims, meaning that a producer is automatically liable for the damage a product causes. The ‘producer’ includes the individuals or businesses who imported that product into the EU, so under the CPA, the injured person can seek damages from the importer, rather than attempt to take legal action against a manufacturer based outside of the EU, which could be a complicated and costly process.
If you currently import from outside the EU to sell in the UK, then the CPA applies to your business.
The General Product Safety Regulations 2005 (GPSR)
All products for sale in the UK must be safe to use, so businesses must ensure that the items they sell comply with GPSR by taking “reasonable steps”. The definition of “safe to use” depends on the nature of the product.
Products such as towels or Christmas cards are unlikely to cause injury and therefore will require a lower standard of due diligence. However, retailers should carefully consider the hazards that could be posed by all products, even ones which appear to be low-risk.
Chris Salmon, Director of Quittance said, “Products must not only be safe for their intended use, but must also be safe in a more general sense. Clothing, for example, must not be flammable even though ‘setting clothes on fire’ obviously isn’t intended use. Breaching GPSR safety regulations is a criminal offence, for which penalties can include statutory fines, or even imprisonment.”
How will product liability regulations change in January 2021?
Online retailers who import products from the EU need to be aware of the changes that will come into force in January 2021.
Both the CPA and the GPSR will become subject to amendments, as the Product Safety and Metrology Regulations 2019 come into force to bridge any regulatory gaps in product safety that occur once the Brexit transition period comes to an end.
From January 1 2021, the CPA will apply to anyone importing into the UK from the EU. Distributors who import products into the UK will be subject to strict liability rules for defective products sourced from anywhere abroad. Previously, liability for damages only applied to EU-based manufacturers or importers into the EU.
Furthermore, UK importers will now be responsible for carrying out product safety checks, which would previously have been conducted by an EU supplier.
The changes to GPSR safety rules will also require importers and retailers to put measures in place to protect customers, including:
- Receiving notifications of product recalls from non-UK distributors or manufacturers
- Conducting safety testing
- Notifying customers and distributors about product risks and defects.
Is your insurance policy fit for purpose?
From January 1 2021, many more UK online businesses will be liable for injury caused by products sourced from the EU, and this, in turn, is likely to lead to an increase in product liability insurance claims.
Retailers and businesses should check their current product liability insurance policies to check that they will be fit for purpose when the transition period is over, and amend them if not. The increased exposure to liability may cause the cost of insurance premiums to increase, and new policies may require retailers to take additional steps to ensure the safety of their products.
If someone is injured as a result of a defective product, the subsequent compensation claim can be costly for a business. Claims can also take years to resolve. If a person sustains permanent or life-threatening injuries, damages awarded can run into £100,000s.
Your level of insurance cover should take into account the risks posed by your products, as well as who may be likely to be affected by an injury (e.g. members of the public, a buyer’s children or family).
Recalling products post-Brexit
Another change will be the way in which defective products from the EU are recalled from sale.
Previously, an EU-wide product recall was made using an alert system called ‘Safety Gate’, which allowed countries to share information with one another and recall unsafe products.
From January, the UK’s involvement in Safety Gate will come to an end, and UK-based importers and distributors will no longer be required to withdraw defective products that are recalled through Safety Gate alerts.
Although the UK plans to adopt a ‘Safety Gate’-style system, the exact details of this have not yet been made available. Therefore it is advisable for UK businesses to subscribe to EU safety notices until the new system rolls out.
Replacing the CE mark with the UKCA mark
The CE mark is a European safety indicator that certifies that a product complies with health and safety regulations within the European Union. This will be replaced by the UKCA mark (the ‘UK Conformity Assessed’ mark) for products sold in the UK.
Currently, low risk products only require self-certification that safety standards are met. The certification process could change once the details of any UK-EU trade agreement become clear, and as the UK’s own safety standards regime develops.
What to do now
The changes that will come into force in January will have significant implications for all online retailers in the UK, so it’s important to consider how your business may be affected and make sure that you are prepared for any changes.
Some businesses may wish to review how and where they source their products, given the increased liability that will now come from importing from the EU.
Even if your products are manufactured and distributed within the UK alone, it is worth taking the time to assess your safety protocols to ensure that you will be compliant with the new regulations. This could include reviewing your labelling and marketing materials to ensure that warnings and safety notices are clear and that product descriptions are accurate.
You should also review your product liability insurance policy to ensure that you will be covered once the new regulations come into force, as you may be exposed to additional liability.
If a product you sold or imported causes serious, life-altering injury, an appropriate insurance policy will help to protect your business financially. More importantly, insurance cover ensures that the injured party can receive the full compensation award required to support their recovery.