Regulatory Outlook: Product Regulation - November 2016

Current Issues

Civil drones (small unmanned aircraft): Concerted efforts to allow for wider commercial and consumer usage: This year has seen significant steps taken towards updating regulations for civil drone usage, which may help businesses realise commercial value in this area.

In the UK, the Civil Aviation Authority has granted Amazon permission to test drone delivery. The UK Government has been vocal about wishing to be seen as an international leader in this area.

The European Aviation Safety Agency (EASA) has published a draft regulation which is being considered by the European Commission.

Driverless cars: Innovation continues at speed, UK Government tries to update regulation to keep pace: Regulation is struggling to keep pace with technology in this area; companies wanting to take advantage of semi and fully autonomous vehicle technology need to ensure that what they are doing is compliant with current regulation.

In the UK, the regulatory environment makes testing of autonomous and semi-autonomous technologies relatively easy, but everyday usage not so. However, the UK Government has announced that it intends to bring through legislation by summer 2017 to accommodate the commercial roll-out of driverless.

Launch of new Central Product Recall Database for electrical products: The UK Retail Ombudsman has launched a new Central Product Recall Database for electrical products. Consumers can register their contact details together with information about electrical products they have purchased.

This may be useful to manufacturers when complying with obligations to warn consumers of safety issues. However, it is dependent on a high degree of consumer engagement and it is unclear how interaction with manufacturers will work.

Predicting the impact of Brexit on CE-marking: The practical effect of the recently announced Great Repeal Bill for product regulation will be that CE-marking is here to stay, for at least the next few years. Thereafter, whilst we have no certainty, it would make practical sense for the UK to maintain the scheme, as it would still allow UK manufacturers to sell throughout the EU.

The Product Safety and Market Surveillance Package rumbles slowly on: The long-awaited new package of legislative measures aimed at improving EU consumer product safety and strengthening market surveillance of products is still not yet in force and there is no clear date set for this.

From a practical perspective, it would be preferable to have it in place prior to the Brexit conversion of all EU law into UK law, so that manufacturers who sell in the UK and EU only have one set of rules to comply with for the foreseeable future.

In Focus: Enforcement

Where non-compliance with product regulations has taken place, regulators will commonly encourage and promote voluntary action first. Only when that fails will regulators use their enforcement powers. These are a range of powers which can force remedial measures to be taken to remove the risk the non-compliant product presents, such as suspending sales of the product whilst further tests are done, or requiring that products are marked or provided with warnings, or recalled. There is also the option for prosecution which could result in a fine or imprisonment for an individual.

We do see discrepancies in how different regulators deal with unsafe products, with some regulators being more active than others, resulting in some categories of products being perceived as more highly regulated than others. For example, the Food Standards Agency, DVSA and MHRA are typically more active, Trading Standards less so.

Given that Trading Standards is responsible for enforcing a large swathe of consumer product legislation, particularly around consumer electrical items and toys, there is a perception that enforcement is therefore relatively light in this area.

This light touch has been subject to increasing criticism within the UK – the specific criticism being that it is allowing cheap dangerous products, particularly imported products, onto the market and not enough is being done to recall unsafe products.

The current UK consumer product recall system

The current UK consumer product recall system was the subject of an independent review, which was published in February 2016.

The report considered that the current process needed major change and made several recommendations, including: the creation of a national product safety agency/centre of excellence; increased funding and training for the regulating authorities; better and clearer guidance; increased consumer engagement; and better data sharing. There was also a call for reestablishment of the national injury database.

In the government’s formal response, there was little appetite for a new safety agency, and suggestion of increased funding was deferred pending a review of Trading Standards. Reestablishment of the national injury database was not considered helpful. However, there was acceptance that better guidance and data sharing would be beneficial. The government has since established a steering group who will monitor the government’s response to the review.

We are also seeing a focus on enforcement at EU level. Echoing the views in the UK, the European Commission recognises that non-compliant products are passing unnoticed into the Single Market and posing risks to consumers. To address this, the Commission has launched a public consultation on current market surveillance measures.

In the short term, these deep dive explorations of how product regulation is enforced are likely to have little impact. They are non-binding in nature and, particularly in the UK, absent any major reform. Trading Standards lacks the funding and resources to address product regulation non-compliance. However, looking further forward, and regardless of Brexit, we foresee both the EU and UK being more active in securing voluntary compliance with product regulation.

Dates for the diary

December 2016

Update anticipated on the progress of the Product Safety and Market Surveillance Package.

January 2017

Update anticipated from the European Commission on how it intends to reflect proposals in EASA’s prototype regulation for civil drones.

July 2017

Revised UK legislation anticipated to accommodate legal use of semi and fully autonomous vehicles on UK roads.

For more information and details of all of the other areas covered by the Regulatory Outlook click here.