Liability and regulatory responsibility for products post Brexit
With the Brexit deal now done, the consequent changes to UK product liability and safety laws have become a reality for many businesses.
Specialist regulatory solicitors Melissa Toney and Holly Snook explain the changes and how to avoid the penalties of non-compliance
Understanding the burden of liability and regulatory responsibility for products
Over the last few days, we have had a large number of businesses make contact as it is becoming very clear that the burden of liability and regulatory responsibility for products may no longer attach to the same entity within a supply chain. This redistribution of responsibility is likely to cause confusion, particularly for those businesses operating within both the UK and the EU. With significant potential sanctions for non-compliance, businesses will not only need to consider their roles as manufacturer (or producer), importer, distributor and/or authorised representative but to also understand the changes to their obligations and implement sufficiently robust systems and processes to ensure compliance.
Regulatory law changes
So we know from January 2021, the UK will be classified as a non-EU country (a ‘third country‘) and will no longer fall within the EU product compliance regime. The Product Safety and Metrology etc (Amendment etc.) (EU exit) Regulations 2019 will come into force at the end of December 2020, amending an array of sectoral product safety laws as well as the Consumer Protection Act 1987 (CPA) and the General Product Safety Regulations 2005 (GPSR).
The amendments to the CPA mean that distributors importing products from the EU will become ‘importers’ of products into the UK and will be held liable as ‘producers’ for personal injury or property damage arising from any unsafe products that they supply in the UK. The amendments to the GPSR will change the definition of ‘producers’ to cover UK manufacturers of products or “a person established in the UK that places a product from outside the UK on the market”. These responsibilities cannot be delegated to entities outside of the UK (including the EU).
The current EU CE marking system will also no longer apply in the UK. The UK Conformity Assessed (UKCA) marking system will be the new UK product marking used for those goods being placed on the UK market which previously required a CE mark. This will follow broadly the same principles as the current CE marking system, but with the safety and compliance standards, authorised representative/responsible person and notified body requirements all now being valid for the UK only.
What does this mean for your business?
As a result of these changes, UK distributors importing products from the EU will, effectively, take a step “up the chain” in terms of responsibilities and liabilities and will be responsible for ensuring that the producer (outside of the UK) has complied with its obligations. UK distributors, soon to be defined as importers or producers, will be required to display their name, address and a product reference on products supplied to the UK. The requirement to label or re-label products is likely to put additional demands on the resources of a business, both in terms of time and money. Newly defined importers and producers will also be responsible for ensuring that only safe products are placed on the UK market, and that the other producer obligations have been complied with, including:
- drawing up the required technical documentation;
- carrying out the applicable conformity assessment (or having it carried out), and affixing the conformity marking, where required;
- satisfying the traceability requirements;
- providing instructions and safety information in a language easily understood by consumers;
- taking measures to enable the producer to be informed of the risks which the products might pose, and taking action to avoid such risks;
- conducting sample testing, where reasonable to do so;
- investigating complaints; and
- keeping distributors informed of the risks a product may present.
As the “due diligence defence” is the primary defence available to any business which finds itself subject to enforcement action, any business importing products into the UK or selling a product from outside the UK will need to review and consider enhancing its own due diligence processes to ensure it can demonstrate compliance and appropriate risk controls in the UK.
The UKCA mark will not be recognised in the EU, therefore any products which require CE marking and which are exported from the UK to the EU will need to comply with both marking regimes.
To provide for an adequate period of transition the UK Government has stated that CE marked goods that meet EU requirements can continue to be placed on the Great Britain market until 31 December 2021, but only where the EU and UK requirements remain the same. The goods must also meet any of the following criteria in order to continue to use the CE mark:
- the CE mark is applied to the goods on the basis of self-declaration;
- any mandatory third-party conformity assessment was carried out by an EU-recognised notified body; or,
- the certificate of conformity previously held by a UK approved body has been transferred to an EU-recognised notified body.
However, you will need to use the new UKCA marking immediately after 1 January 2021 if all of the following apply to your goods.
- are for the market in Great Britain;
- are covered by legislation which requires the UKCA marking;
- require mandatory third-party conformity assessment; and,
- have had conformity assessment carried out by a UK conformity assessment body and the conformity assessment files have not been transferred from your UK body to an EU recognised body before 1 January 2021.
The consequences of non-compliance
The legislative changes mean increased responsibilities and liabilities as many businesses will take a ‘step up’ the supply chain. This means that businesses will be more susceptible to investigation by the UK enforcing authorities, and to criminal prosecution and liability, in relation to goods that it imports (Trading standards authority). Whilst it is possible to pass on civil liability on to the party from whom it imports its goods through contractual documentation, it is not possible to do this for criminal liability.
Prosecution for failing to comply with product safety obligations can result in imprisonment and/or a fine, which for some offences could be unlimited. Enforcement action can result in customs delays, product seizure, stop notices and enforced product recalls.
It is likely that, subject to the anticipated value of recovery, consumers will pursue claims against the importers or producers of defective products in the UK who are more closely domestically linked to the UK and therefore easier to sue in UK courts. Consequently, businesses should review their product liability insurance to ensure they are covered for the increased liabilities and legal costs that may arise in relation to defective products supplied to or sold in the UK.
With less a month left until the transition period expires, businesses must take steps to understand and mitigate against the impact of this change in legislation. The significant consequences of a failure to do so means businesses must act now to review their supply chains and processes to ensure compliance come January 2021.
Specialist regulatory legal advice
If you think your business will be affected by these changes and you would like advice about how to navigate the technical aspects, our Regulatory legal team is on hand to help. Please call 0117 906 9400 or email firstname.lastname@example.org