The Australian Treasury will examine whether regulatory settings effectively address concerns about commercial conduct in the motor vehicle insurance and collision repair industry.
Currently, commercial conduct is self-regulated by the voluntary Motor Vehicle Insurance and Repair Industry Code of Conduct. The voluntary code applies to all collision repairers and insurance companies that are signatories and is only mandated in New South Wales.
Treasury will provide a report to the government in the second half of 2022.
The Motor Trades Association of Australia (MTAA) said Assistant Treasurer Michael Sukkar and the government have listened to concerns about significant market power imbalances detrimental to consumers and small business, and acted to address them.
“The government action follows decades of representations and advocacy for recognition of the impact of constraining commercial conduct and detrimental behaviours by powerful insurance companies on [collision] repair small businesses and consumers,” the MTAA said.
Stavros Yallouridis, MTA NSW CEO, believes the voluntary code and current regulatory settings do not deter unwanted or unwarranted conduct and behaviours, or address the impacts of a significant market power imbalance by some dominant insurance company participants.
“MTAA and members, supported by MTA NSW, recently highlighted the lack of recognition and adequate compensation for repairers forced to absorb price increases on materials and supplies,” Yallouridis said.
“This examination is an acknowledgement that the current industry settings, with a voluntary code, unfairly advantage large insurers over small business and do not promote a healthy and efficient [collision] repair industry. The government has recognised the need for reform, including prescribing a mandated code of conduct as a long-term solution.”
The Victorian Automotive Chamber of Commerce (VACC) welcomed the announcement. “2022-23 is full of hope and opportunity as Treasury embarks on a national review that has been long awaited. This examination is the start of recognising the need for reform, including prescribing a mandated Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct,” the VACC told its members.
The Chamber added that regulatory reform is required to address the lack of binding dispute resolution processes, interpretation issues with the current voluntary code, and to ensure penalties are applied when the code is not adhered to.
“An enforceable code provides an important basis of understanding between the parties and their respective rights and obligations, establishing a common ground and bilateral participation across the industry,” the VACC said. “It is an historic moment for the [collision] repair and insurer industry, which will ideally pave the way for fairer engagement between business and insurers.”
The government said the examination will build on its recent investigations into automotive industry markets and resulting regulatory reforms benefiting the automotive sector. These include the Motor Vehicle Service and Repair Information Sharing Scheme, significant updates to automotive dealership aspects of the Franchising Code of Conduct, and legislation to enhance protection against unfair contract terms.