Pauline McCulloch

Last month, a fire caused by an apparently faulty Indesit tumble dryer spread through 5 floors of a tower block in Shepherd’s Bush. The damage was devastating. Whirlpool, the owners of Indesit, had already issued a safety notice for the model in question, alongside Proline, Hotpoint and Creda models, advising that affected appliances could continue to be used while awaiting modification, provided they were not left unattended during operation.

In light of this, Labour MP for Hammersmith, Andy Slaughter, led a debate in the House of Commons on the current UK product recall system at which he claimed that the owner of the faulty tumble dryer had “followed Whirlpool’s advice to the letter”. Alongside a cross-party group of MPs, Mr Slaughter asserted that Whirlpool’s advice should have been to stop using the machine pending repair or replacement.

This has brought into focus the recommendations of an independent review of consumer product recall chaired by broadcaster and consumer campaigner Lynn Faulds Wood, which took place earlier this year. This review highlighted key concerns in relation to enforcement of sanctions for faulty products. It found that consumers are often uninformed, that the Trading Standards authorities are under-resourced and that there is a lack of incentive within the industry to recall unsafe products given the perceived stigma attached to doing so and the absence of effective penalties for failure to comply.

Although the government agreed to apply some of the review’s recommendations, such as the creation of a dedicated consumer information website, a review of Trading Standards and better collaboration between organisations, it rejected others such as the re-introduction of a national injury database and the establishment of an official national product safety agency. It commented that these measures would be disproportionate and an ineffective use of taxpayers’ money. At this month’s debate, the cross-party group of MPs contended that the government’s response was insufficient and that more of the review’s recommendations should be implemented.

In light of the issues raised, Consumer Minister Margot James MP agreed to discuss the concerns with the steering group set up to oversee the implementation of the review’s recommendations, and asked them to produce an interim report.

Following six weeks of investigations, Margot James stated: “Customer safety must be the number one priority for manufacturers. I acknowledge that Whirlpool are making great efforts to modify and replace at-risk machines, but I believe additional action is required to reassure customers and the public. I will be writing to the company to set out my concerns and expectations.”

This has the potential to spell the beginning of an era of greater regulation of the product recall system. At present, where a producer discovers that products are unsafe, they have an obligation to notify the relevant enforcement authority (in Scotland, the local district council, or a specific sector enforcement agency), and then take action to remove the risks involved. This is the case even where the product has not actually caused a consumer injury at that point, but where there is the potential for it to do so. This may include a product

recall. Failure to comply with these obligations, or where any action that has been taken is unsatisfactory or insufficient to prevent the risks, may result in enforcement action by the local authority. These enforcement powers include requiring suspension of sale, withdrawal from the market or recall of the product, as well as imprisonment and fines. The current concern appears to be that while this regime exists, more effective enforcement is required. In addition, a recall is only considered as a last resort once other measures have been exhausted. The government has, to date, appeared reluctant to take significant measures to change the status quo.

Regardless of whether any changes to the law are made, Whirlpool and the Indesit brand have now spent a significant period of time in the headlines (and now in Hansard) on the issue. Consumers are unlikely to forget that in a hurry.

In opting to issue advice for continued use of its products instead of implementing a recall, severe damage can be caused to a brand’s reputation. It is important to highlight that there is no evidence to suggest Whirlpool did not comply with its legal obligations. Whirlpool claims it shared all relevant information with Trading Standards, sought their recommendations and agreed with them corrective action. Consumers won’t remember that detail. Instead, the enduring memory of this episode will be a tower block blaze that reignited a parliamentary debate and government intervention.

This damage has the potential to cost shareholders far more in the long run than a recall might have done. Indeed, the opportunity to create a good news story by reacting promptly and demonstrating a willingness to put consumer safety first has been lost.

Embarking upon a product recall will not always be the most suitable response to a product safety issue. However, when faced with a product crisis, a long term strategy is always to be prioritised over any immediate impact on the profit and loss account. The result is far more likely to create happy memories.

Pauline McCulloch, senior solicitor at Burness Paull LLP