Review drives change for vehicle consignment sales

WA Department of Mines, Industry Regulation and Safety

When it comes time to move on a car or caravan, some people may lack the time or confidence to negotiate a private sale themselves.

Engaging a dealer to sell the vehicle on their behalf can therefore be a viable option, but selling on consignment does come with some risk.

Given the dealer can keep any money they receive from the sale in excess of the amount they agree to pay the owner, this has at times resulted in dealers giving below reasonable value sale price estimates to vehicle owners.

After dealers Luxuride and Xoticar broke the law while selling vehicles on consignment, leaving their victims a combined $2 million out of pocket, Consumer Protection undertook a review of the industry and its future in Western Australia.

While the consultation presented options for no changes or to ban consignment sales altogether, the consensus from the feedback received suggested that consignment sales were important to both dealers and vehicle owners, but that stronger laws were required.

To stop unsuitable people from obtaining a licence to sell on consignment, the State Government has proposed changes to the Motor Vehicle Dealers Act that would include establishing a more stringent character test that would also assess an applicant’s close associates.

The training course would also be updated to ensure dealers have a clear understanding of their legal obligations when selling on consignment.

Another change would be to introduce a separate licence category for consignment sales that required applicants to comply with specific conditions.

These proposed new laws would be implemented on top of the existing rules, which include a requirement for all consignment sale contracts to be in writing, contain certain regulated terms and conditions and state the amount the owner is to be paid. A trust account is currently required to hold all proceeds from any consignment sale, the total net proceeds of which must be paid to the owner within two business days of the dealer receiving payment.

Our website at www.consumerprotection.wa.gov.au contains further information about the current rules for consignment sales and the recommendations from the consultation.

Gary Newcombe city 3
Gary Newcombe city 3, by CP Media

Gary Newcombe

Commissioner for Consumer Protection

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