Stronger consumer protection needed in the used car market

A new investigation by Consumer Scotland has found that, while the used car market works well for most buyers, serious issues occur which can have a significant impact on consumers.

Finding solutions can be challenging, with consumers often required to engage with traders, finance companies, warranty providers or, in some cases, the courts.

Consumer Scotland has made a series of recommendations for improvement to a range of bodies including the Scottish and UK governments, the Financial Conduct Authority, the Chartered Trading Standards Institute, consumer bodies, regulators, licensing bodies and 
the industry itself.

Our recommendations focus on better information for consumers, clearer ways to find a solution when things go wrong and stronger standards to protect consumers.

Although consumer rights are strong in theory, our investigation found that in practice they are difficult to enforce and some disputes can leave buyers with either no recourse or a confusing picture of alternative dispute mechanisms. 

And while Scotland has a local licensing system for the used car industry, it is not up to date, or working as well as it could for the trade or consumers. 

Scotland’s used-car market is economically significant, with an average of around 589,000 transactions each year in an industry with a market value of over £9.6 billion.

At a time of continuing cost of living pressures, buying a used car is one of the most significant financial decisions many households in Scotland will make. Used cars provide essential access to work, education, caring responsibilities, family life and vital services.

As part of the investigation Consumer Scotland worked with consumer, enforcement and regulatory bodies, as well as the used car industry, to gather as wide a range of evidence as possible - as well as using existing data and commissioning an independent survey.

The survey of more than 1,000 recent buyers of used cars in Scotland found most consumers have positive experiences and complaints represent a minority of transactions, but more than half (53%) reported a problem, while around one third (29%) said an issue had caused them some form of harm.

Although the severity of issues varied, engine and technological faults were among the most frequently reported which can be costly, difficult to diagnose and disruptive - especially where consumers rely on the car for work, family responsibilities or access to services.

Separate data from advice body Advice Direct Scotland (ADS) found independent traders and cars bought at a distance were associated with a higher proportion of serious complaints, including major faults, refusal to resolve problems, misleading descriptions and poor complaint handling.

The ADS data showed nearly a third of complaints cases sampled (32%) related to purchases from traders in England.

Our recommendations include: 

• Stronger standards and oversight: As a priority the existing licensing system in Scotland should be strengthened, potentially though legislation, while enforcement and oversight needs to keep pace with the modern market including online and distance sales
• Better information and guidance: Consumers and traders need clearer, more practical information on rights, remedies, warranties, finance responsibilities and distance sales
• Clearer routes to redress: Consumers need complaint and redress routes that are visible, trusted and easier to use, particularly where disputes involve independent traders

Chief executive of Consumer Scotland Sam Ghibaldan said:

“Most consumers have a positive experience of the used car market, but when things go wrong the impacts can be serious, stressful and long-lasting.

“Some consumers face a higher risk of harm, particularly those with lower financial resilience, those buying lower-value vehicles, rural consumers and people who rely heavily on their car for daily life.

“Our recommendations provide clear solutions to improve the market.

"Clearer information should reduce avoidable disputes, stronger standards should improve trader practice and more accessible redress should help consumers resolve earlier when faults arise.

"A fairer used-car market in Scotland should be one where consumers can make informed choices, traders meet clear standards, and people have practical routes to resolve problems when things go wrong. This report is an important step towards that goal.”

Chief Executive Officer of the Scottish Motor Trade Association Alan Gall said:

“As the voice of the automotive industry in Scotland, we welcome Consumer Scotland’s final report and the clarity it brings.  

“The association, on behalf of its members, looks forward to working closely with Consumer Scotland to build trust, improve understanding, and drive high standards across the industry.”

“Chief executive of Advice Direct Scotland Andrew Bartlett said:

“The investigation has been a valuable collaborative effort to help consumers in Scotland.

“Most people have no issues when they buy a used car, but for some people there can be problems - and we are here to help them when that happens.

“The market is increasingly UK‑wide, with online marketplaces and hybrid purchasing now common. Consumer protections need to keep pace with this rapidly evolving market.”

Background 

Consumer challenges in Scotland’s used car sector 
 
Consumer Scotland is the statutory body for consumers in Scotland and as part of our legislation we may undertake investigations into sectors or practices which we consider cause, or may cause, harm to consumers. 
 
Consumer Scotland launched the current investigation to understand the nature and scale of consumer harm in Scotland’s used-car sector, the main causes of disputes, and whether current rights, redress routes, regulatory arrangements and industry standards support good outcomes for consumers. 
 
Consumer Scotland’s investigation brings together consumer research, advice case evidence from Advice Direct Scotland, market analysis and stakeholder insight to understand the nature and scale of consumer harm, the causes of disputes, and where improvements could strengthen confidence in the market. 
 
For questions, inquiries, or assistance Advice Direct Scotland can be contacted on 0808 800 9060 between 9am-5pm Monday to Friday.