The Motor Trades Association of Australia (MTAA) says an announced Treasury examination of motor vehicle insurance and the smash repair sector is welcome as it pushes for a mandatory code of conduct backed by penalties for breaches.

“Our concern is that the voluntary code, after more than 10 years, is not effectively working and it is not working because there is no deterrence factor,” MTAA CEO Richard Dudley told insuranceNEWS.com.au.

The Motor Vehicle Insurance and Repair Industry Code of Conduct, in operation since 2006, is overseen by an administration committee that has three appointees from the MTAA and three from the Insurance Council of Australia (ICA). The code was put in place following a Productivity Commission report in 2005.

Mr Dudley says the arrangements are not proving effective, more transparency is required and national action is needed, building on state-based inquiries that have also looked at issues. Currently the code is only mandated in NSW.

“Insurers, in our opinion, and our own industry are spending an inordinate amount of time and effort and resource on settling disputes which wouldn’t occur if there was a stronger deterrence and a stronger compliance requirement,” he said.

Assistant Treasurer Michael Sukkar said earlier this month that the Government would task Treasury to examine whether existing regulatory settings effectively address concerns about commercial conduct in the motor vehicle insurance and smash repair industry.

“The MTAA, its state and territory member associations and the Australian Motor Body Repairers Association have raised concerns about market power imbalances it believes is causing detriment to smash repair businesses and consumers,” Mr Sukkar’s statement said.

“The examination will build on several of the Government’s recent investigations into automotive industry markets and resulting regulatory reforms that benefit the automotive sector.”

ICA says it notes the announcement and will work with members to provide input to any future Treasury examination of regulatory settings.

“Through the Code Administration Committee, we will continue collaborative work with the MTAA to ensure the code assists both repairers and insurers in achieving a balance of fairness in their dealings with each other,” a spokeswoman said.

Mr Sukkar’s statement, released on the day the May 21 election was called, says Treasury is scheduled to provide a report to the Government in the second half of the year.

Mr Dudley says he expects Labor would also support the review if it forms government after the election.