We've been expecting to hear from the Office for Product Safety and Standards (OPSS) on product safety regulatory reforms since the Government's Call for Evidence in March 2021, when it invited views on the long-term approach to product safety and how to ensure that the regulatory framework for consumer products is fit for the future. What we did not expect was that the Government would backtrack on its intention to make UKCA marking compulsory after December 2024, or that the OPSS would announce a further public consultation on proposed reforms to UK product safety rules. We take a look at these developments in detail below.
Long live CE marks
A CE mark is affixed to certain products placed on the EU market (eg, machinery, electrical equipment, medical devices, and toys) to show that the manufacturer has checked it complies with applicable EU legislation.
Post-Brexit an equivalent UKCA marking regime has applied in Great Britain (GB) since 1 January 2021, although a transition period meant that CE marks would still be recognised on products sold in GB until 31 December 2024. But the decision to make UKCA marking compulsory after that was not favoured by manufacturers, largely due to the cost and time required to comply with the rules.
Following extensive engagement with industry, and as part of the Government's vision for "Smarter Regulation", the Department for Business and Trade (DBT) very recently announced that it will introduce further legislation to continue to recognise CE marks, indefinitely, on goods sold on the GB market which fall within its remit (ie, those which are covered by the 18 regulations it oversees). As such, businesses selling these products on the GB market will be able to choose whether to use the UKCA and/or CE mark.
It is hoped that cutting "red tape" for businesses will drive innovation and growth for the UK economy. However, it is unclear how this will work where the UK and EU's product compliance requirements diverge. In these circumstances, a CE mark will not be equivalent to a UKCA mark, so it is questionable how a UK authority will be able to accept a CE mark.
It should also be noted that, as things currently stand, two sectors – medical devices and construction products – are not covered by this extension. This means the UKCA mark will still be required for products in these categories being placed on the GB market in accordance with the requirements of the Medical Device Regulations 2002 and the Construction Products (Amendment etc) (EU Exit) Regulations 2019 respectively (but these are also subject to change).
We suggest that businesses should continue to monitor developments in this area closely when draft legislation or further guidance from the UK Government is published.
Consultation on product safety
The OPSS's Consultation (Smarter Regulation: UK Product Safety Review) which was launched on 2 August 2023 also forms part of the Government's Smarter Regulation strategy. The Consultation outlines thirteen proposals in relation to three core aspects of the proposed new product safety framework: bringing products to the market; online supply chains; and compliance and enforcement.
To help develop and design the detail of the new framework and to ensure that it will work well for everyone, all stakeholders eg, consumers, consumer organisations, businesses, manufacturers, conformity assessment bodies, local authorities, and national regulators, are invited to respond to the twenty-three questions posed by 24 October 2023 (when the Consultation will close).
Background to the Consultation
The OPSS recognises that product safety law is unnecessarily complicated and disjointed, having been developed over decades through a mixture of legislation (both at an EU and UK level), technical standards and guidance. It is also accepted that the law is outdated and no longer fit for purpose as it cannot keep pace with rapidly developing technologies and global supply chains, which are increasingly interconnected and complex.
Although fundamental reform is necessary, the OPSS also recognises that there is no "quick fix" and it intends to implement reforms progressively, prioritising those changes that will benefit businesses and consumers the most. This is to ensure that UK businesses can adapt smoothly to change without stifling innovation and growth, whilst consumer's confidence in products and their safety is maintained.
In a similar vein to the Government's plans to take a pro-innovation approach to AI regulation, by leveraging the expertise of regulators rather than introducing new legislation, the OPSS only intends to use detailed product-specific regulations if necessary and it will "make the best use of voluntary technical standards and guidance to ensure agility and flexibility in an ever-changing market."
The key message in relation to all future reform is that the Government wants to give businesses maximum scope to innovate when producing safe products and not place unnecessary burdens on them. It will only intervene when needed to protect consumers. Further, there needs to be flexibility so that frameworks can evolve with advances in technology and respond accordingly.
A summary of the proposals
Bringing products to the market
- Examine options for a new approach centred around potential hazard, cross-cutting risk-based safety requirements and transparency.
The intention is to move away from the current multiplicity of regulation and create a system where differing levels of requirements would apply to demonstrate a product is safe according to the hazard it presents and potential harm it could inflict. There will be support for pre-market risk assessments to encourage businesses to design out or replace more hazardous components, and standards and guidance will be used to ensure agility and flexibility in an ever-changing market.
This is a radical change to the existing regime, which the OPSS hopes will: (1) ensure that a business's obligations are proportionate to the hazard presented by their products; (2) reduce compliance costs for lower risk products; and (3) make the conformity assessment process easier where possible.
It has been mooted that categorisation criteria could include the likely impact should harm be caused, the expected user group, the likelihood of harm being caused, the environment it is likely to be used in, and the cumulative effect of risks. However, these criteria are subjective, potentially causing uncertainty and the need for additional product testing, thereby increasing rather than reducing compliance costs.
Further, this is a very different approach to the EU regime, meaning businesses placing products on both the UK and EU markets will have to comply with two sets of rules, increasing confusion and compliance costs.
- Establish a derogation process, enabling business to apply for temporary regulatory easements to speed up supply of essential products in emergencies.
A derogation process would enable products critical to an emergency to be placed on the market faster than would otherwise by the case in exceptional cases, where there is a serious risk of harm to people, businesses, or the environment (as was required during the COVID-10 pandemic).
The Medicines and Healthcare products Regulatory Agency (MHRA) has already established a rigorous process to allow a UK manufacturer, or its UK-based Responsible Person, to apply for a temporary derogation from the usual conformity assessment procedure whilst the full conformity assessment is underway. The Consultation explains that respondents to the Call for Evidence were supportive of a similar process being established by the OPSS and so this is a welcome development, provided the procedure is similarly stringent so as not to compromise on safety.
- Take full advantage of digital labelling.
Manufacturers will be permitted to use electronic labelling (e-labelling) to provide a conformity marking and their details on the screen of a device, rather than having to provide a physical label, if this works best for their business model. The aim is to reduce business costs, unnecessary burdens, and waste, and allow information to be easily updated through the lifetime of a product. However, in reality, this is likely to have limited impact as there will be several exclusions. For example, voluntary e-labelling will only apply to devices with integrated screens / products designed for use with a screen, and product safety warnings will still need to be provided physically with the product.
Online supply chains
- Clarify cooperation duties for new business models, particularly "online marketplaces", to ensure effective cooperation.
In accordance with current product safety legislation, manufacturers, importers, and distributors have certain duties which they must fulfil. However, it has been unclear in recent years whether these duties apply to online marketplaces, and so clarification of their product safety responsibilities will likely be welcomed.
The OPSS proposes to set out in legislation that if a business conducts certain activities eg, providing an online platform which connects traders with buyers and enables sellers to list products for sale, they are an "Online Marketplace" and will be subject to specific duties. These could include cooperating with enforcement authorities to provide information and take appropriate action if products are unsafe and non-compliant and establishing a compliance function in the UK to develop appropriate policies, processes, and systems to address the availability of unsafe products.
The OPSS considers that these proposals will make it fairer for businesses to trade in the UK as they will all have duties proportionate to their activities in the supply chain. We question whether online marketplaces will agree that these potential new burdensome duties are proportionate to their activities.
- Set out due care requirements in relation to unsafe product listings.
To address concerns regarding the ease with which unsafe products can be sold online, Online Marketplaces will have specific due care requirements. For example, they will be required to identify and remove unsafe product listings, and they may have to report on their performance ie, online marketplaces will be subject to additional burdens, contrary to the OPSS' intention to reduce the burden on businesses.
- For higher risk products, increase consumer-facing information on online product listings to support informed purchasing decisions.
There is currently no requirement for product safety and traceability information to be displayed online, creating inequity between online and high street sales. The OPSS therefore proposes that online product listings should have clear consumer-facing information to make it safer for consumers to shop online, although this may be limited to those products categorised as "high-risk" to ensure proportionality.
Compliance and enforcement
- Enhance the leadership and coordination role of OPSS.
It is proposed that the Secretary of State will have the power to: (1) produce statutory guidance for Local Authorities; (2) take over an investigation if a case is nationally significant, novel, or contentious and would fall under the OPSS's purview; and (3) delegate responsibility for enforcement.
Statutory guidance will set out the key functions and principles which Local Authorities should apply when assessing product safety incidents and when using their enforcement powers. This will ensure consistency of regulatory activity nationally, whilst providing Local Authorities with flexibility to adapt where a particular approach may not be working to keep consumers safe. Local Authorities will also have a duty to cooperate with the Secretary of State, which will ensure that the OPSS can better coordinate enforcement activity.
- Facilitate a rich source of data, by creating a new legal data gateway.
Key operators in the product safety system will be required to share data eg, about manufacturers, incidents, investigations, and test reports, so that OPSS can assess risks and intervene where necessary.
- All notification of recalls and serious product safety incidents and other corrective action by a manufacturer or distributor is sent to OPSS, rather than the Local Authority as soon as the economic operator has knowledge of an unsafe product.
It is proposed to introduce a mandatory requirement for businesses to report all product-related incidents of a certain level of seriousness (potentially those resulting in deaths, injuries requiring an overnight stay in hospital, or a fire). At present, whether a report is required depends on the risk presented by a product. The proposed new reporting requirements may be more burdensome (contrary to the Government's intention to reduce the burden on businesses) and the OPSS is considering whether to make it an offence if a business fails to comply.
- Consolidate and align our existing enforcement legislation.
A single set of compliance, withdrawal and recall notices and offences will be created covering all the products in the framework. It is intended to move away from powers being prescriptive, enabling authorities to act in a more agile manner guided by statutory guidance.
- Introduce improvement notices, civil monetary penalties, and enforcement undertakings.
Authorities will have the power to issue improvement notices requiring operators to implement process improvements. Civil monetary penalties will be issuable for certain types of non-compliance taking account of factors such as seriousness, whether harm has been caused, levels of cooperation, and previous patterns of non-compliance. Where a business has supplied a non-compliant product, they will be able to agree with the Local Authority how this will be rectified or remedied and how they will prevent re-occurrence.
Enforcement authorities will be able to require additional actions from Online Marketplaces. For example, where a product presents a particular risk, sellers can be required to provide more information and Online Marketplaces must check it is provided.
- Explore options for changing inspection powers.
This proposal addresses the fact that many businesses today operate from residential properties.
- Reviewing the civil product liability regime in light of technological developments.
The Consumer Protection Act 1987 (CPA) enables consumers to seek compensation for damage caused by a defective product. However, it is unclear whether the definition of "product" includes intangible products such as AI and software, or whether the definition of "producer" includes Online Marketplaces. As such, the current strict liability regime is no longer thought to be fit for purpose and so it unsurprising that the OPSS is considering reform in this area, including whether the regime could be used to encourage businesses to carry out greater due diligence, particularly when products are sold online.
Reform in the EU
The EU has taken the lead on reforming product liability and safety legislation, as it has already introduced a new General Product Safety Regulation (GPSR) which will replace the existing General Product Safety Directive.
The GPSR has widened the definition of a product to ensure that technology-based products are brought within scope. It has also introduced specific obligations for online marketplaces, which are now required to cooperate with authorities and to register with the EU's Safety Gate portal. Online marketplaces must also designate a single point of contact for the authorities if they wish to sell goods in the EU.
The GPSR will take effect from 13 December 2024, demonstrating that the EU has a considerable head start over the UK in introducing its reforms.
Separately, the EU Commission has already introduced a proposal for a new Product Liability Directive (new PLD), which will modernise the EU's strict liability regime for defective products eg, by ensuring that software and AI are expressly within the scope of the legislation (similar to the OPSS's thirteenth proposal above). Unlike the UK, the EU has already drafted the proposed legislation and it is in the process of being debated by the co-legislators, EU Parliament, and the Council.
The OPSS's proposals suggest that we are likely to see some real divergence to certain aspects of the EU's product safety framework in the future. Rules are likely to be less prescriptive and more proportionate with the aim of promoting not stifling innovation, whilst still ensuring consumers' safety and confidence in products. That said, the Government's stated intention is to reduce the burden on businesses where possible, but our view is that many of the proposals may be more burdensome, particularly for online marketplaces.
Taylor Wessing's specialist product liability and product safety team would be happy to help with drafting a response to the Consultation – please reach out to a member of the team. We are monitoring developments in relation to reform of product liability and safety rules closely and you should keep an eye out for our further updates if you wish to learn more.