The evolution of the concept of ‘product safety’ in the EU

In June 2021, the European Union Commission (the Commission) proposed revisions to a key piece of EU product safety and consumer protection - the General Product Safety Directive (the GPSD). The proposal seeks to align key frameworks with the changing landscape of consumer protection requirements as a result of globalisation, modernisation and the COVID-19 pandemic to provide the highest level of product safety and consumer protection.

These changes are the first significant changes since the introduction of the GPSD in 2001, and will fundamentally change the nature of product safety globally by broadening the scope of legislation and incorporating modern concepts within foundational definitions. Global companies, not only operating or based in the EU, but increasingly those that are selling to EU consumers, and their insurers as a flow-on impact, must be aware of their changing obligations, and the increased likelihood of being subject to enforcement actions.

Identified areas of improvement

The EU’s product safety regime and consumer protection laws are generally considered to be world-class, sophisticated systems.

Whilst the GPSD has sought to ensure that only safe products are sold on the EU single market, the European Commission has recently determined a significant amount of unsafe products still circulate on the market – largely attributable to what is considered a historically “weak link” of enforcement of the regime and lack of applicability to modern products, including cybersecurity risks, and selling practices.

In addition to the efficiency of EU recall practices being criticised (it is thought an estimated third of EU consumers continue to use recalled products after a recall notice has been issued), connected and newer technologies are also thought to fall through the cracks of the current system, either failing to be captured by the regime or the advantages of the new technologies not being fully exploited to enhance recall efficiency or safety practices generally.

Proposed changes to the GPSD

Practical implications

Some of the more significant, practical impacts include:

• More even application of product safety rules to online sales necessitating distance and online sellers and those relying on third party sellers to set up internal mechanisms and conduct additional due diligence.
• Clearer guidelines for businesses’ compliance requirements relating to traceability, transparency, recalls and nominating a responsible economic operator.
• Application of enhanced enforcement measures, which could result in a greater number or more significant enforcement actions being taken against non-compliant companies.
• Clearer and express application of the product safety regimes to newer technologies, including connected, IoT and smart devices.
• Requirement to consider cybersecurity risks as part of traditional product safety.

Checklist for companies to prepare

To prepare for these new obligations companies should:

• Reassess product portfolios, particularly in respect of smart, connected devices, to determine whether their products fall within scope.
• Reassess selling practices, in particular online selling practices, to determine if they are now captured by the regimes.
• Incorporate cybersecurity risks as part of basic product safety and compliance requirements.
• Ensure and enhance focus on compliance with product safety regimes across the board to mitigate against risk of increased enforcement practices.
• Enhance recall efficiency strategies, including by way of traceability and recall plans to reduce likelihood of need for regulator involvement.

Comment

By granting clear access to the EU market for novel ideas such as connective devices, IoT technologies and AI, the proposal signals a change in focus of the EU agencies towards modernisation and digitalisation. It also highlights that general product safety regulations and the obligations therein are fluid so we can expect further future developments as the landscape of consumer requirements continues to change.

The proposals will now be discussed by Council and Parliament. Given the significant changes introduced by these topics, and their impact on businesses, it is likely these draft laws will be hotly debated to ensure the balance between consumer safety and innovation is still maintained.

In the UK, the GPSD will apply until it is replaced by new UK legislation, following Brexit. It is anticipated that the UK will follow suit and implement a parallel of the new regime into UK legislation. However, if these amendments are not mirrored by the UK, it will signify the start of deviation of the two regions product safety approaches. Companies and their insurers should be alive to their new obligations under the proposal.

Read other items in London Market Brief - September 2021

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