UK: General Product Safety Directive Implications for the Technology Sector

Last Updated: 21 July 2004
Article by Pauline Munro and Mo Bhaskaran

Originally published July 2004

The statutory regime regulating product liability for goods sold to consumers is about to be stepped up and companies will need to be rigorous in their safety, quality and audit procedures.

Driving this is the harmonisation of product liability laws across Europe through the revision of the General Product Safety Directive (GPSD). The new law will extend the obligations of producers and distributors in relation to product safety. It is currently subject to a consultation process led by the DTI.

Who will this affect?

This major overhaul will affect every manufacturer and distributor, throughout the supply chain, where the goods are ultimately supplied to consumers, which in the technology sector will include:

  • computers, computer equipment, games consoles, mobile phones and other palm technology manufactured and supplied directly to consumers
  • products which are ultimately offered for rent or sale to consumers, although they were originally intended for use in a professional environment
  • products which are supplied to or used by consumers as part of a service.

What are the implications?

As with the existing General Product Safety Regulations, failure to meet obligations in the new GPSD will expose businesses to penalties at the hands of public authorities. Penalties will be 'effective, proportionate and dissuasive'. The current expectation is that penalties will be significant, not least because if the local authority becomes the enforcer, the cost of its involvement will be a factor.

The administrative costs to all businesses of complying with the new GPSD are likely to be unwelcome. Far greater, though, will be the financial and reputational costs of non-compliance.

What is the current situation?

Product safety and liability is currently governed by a number of domestic, sector-based voluntary and European provisions, most notably the 1994 General Product Safety Directive. This stipulates that producers and distributors are liable for the safety of parts they supply, regardless of whether that part is produced by themselves or someone else, or whether it is new or reconditioned. Producers and distributors have to monitor the safety of the components and products they sell and distributors must make information on safety risks available to the manufacturer of the part, where the manufacturer requests it.

Current European law prioritises increased consumer protection and seeks to provide a harmonised approach. Both trends will intensify as the new GPSD is introduced.

What changes with the new GPSD?

The new regulations reflect the steady shift away from regulation between individuals, to regulation by the state. As is currently the case, the enforcement authority is likely to be your local authority, but far greater obligations will be placed on manufacturers and distributors.

There is a definition of what is meant by a safe product with a presumption that products that comply with European standards are safe. However where there is evidence that, despite conformity with such standards, a product is still dangerous, action can be taken to impose restrictions on the product being placed on the market or to require its recall.

Example - mobile phone manufacturers and distributors will need to continue to monitor ongoing research into the health effects of electro-magnetic fields and will also need to consider growing concerns about risks such as repetitive strain injuries from text messaging. RSI will also be of concern to manufacturers and suppliers of both computer games consoles and new products like the Blackberry mobile phone/e-mail messager. Games console makers already provide warnings to consumers of certain risks, such as to users' eyesight (and to those susceptible to seizures) of spending long continuous periods in front of a screen.

The key provisions of the new GPSD

  • Producers and distributors are obliged to inform the relevant authorities when a product in the market is potentially dangerous and the action being taken to prevent further risks to consumers. They must initiate a product recall if other measures are insufficient to protect consumers.
  • Manufacturers and distributors are required to inform the authorities if they become aware that they have put a defective or dangerous part into circulation and advise of steps taken to avert the risk.
  • Notification will require standard information which has yet to be finalised.
  • Distributors (within the limits of their activities) will also have an obligation to monitor safety of products and will be required to maintain detailed traceability information for all products they supply or fit.
  • Producers will be obliged to take steps to enable them to be informed of the risks products might pose. This includes taking steps such as batch marking products, regular testing and auditing of product safety and maintaining a register of customer complaints.
  • Most radical of all, enforcement authorities will be able to order and, if necessary, organise product recalls, where all other methods of protection appear to them to be inadequate and both producers and distributors will have a positive duty to co-operate with the authorities.
  • Finally there is also, for the first time, provision for the European Commission to suspend a product without a member state's request.
  • The emergency ban provision where the European Commission can ban a product outright if it is considered to be dangerous has been extended from three months to one year. The legislation will also stipulate that products which are the subject of an emergency ban cannot be exported to third countries.

There is provision to challenge any decision taken by the authorities to recall a product, and subject to the seriousness of the risk, parties subjected to recall measures will have the opportunity to submit their views prior to enforcement of a recall by the authorities.

How should you prepare?

  • Check the terms of your insurance cover to ensure it covers the costs of complying with the new regime.
  • If you don't have one already, start to keep a register of customer complaints. If you do have one, ensure that it is rigorously monitored and sufficiently detailed.
  • Ensure that you keep an audit trail of the components you supply (or fit), including product identification and origin.
  • Make sure you have robust test systems to continually assess the safety of the products or components you supply. You also need systems in place to keep up to date with current knowledge from ongoing research into risks from products.
  • Check to ensure that the producer of the parts you fit or distribute is able to give you access to its customer complaints register and audit trail.

Alongside changes specifically required to comply with the legislation, ensure that you are satisfied that your company is sufficiently up-to-date with the following:

  • terms and conditions of sale and purchase - review these to ensure that you are not exposed to unnecessary risk.
  • insurance cover- product recall insurance is often separate to standard product liability insurance.
  • crisis plan - have an effective plan in place to be implemented in the event of a product defect or recall covering everything from notifying insurers to PR and customer communications.
  • customer complaints - monitoring trends in complaints can often provide an early indication of an inherent product problem. This will enable you to comply fully with the new GPSD by taking preemptive action and informing the authorities of the issue, should one arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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