European product recalls more than double in 2005 

The number of reported European recalls of dangerous and faulty consumer goods more than doubled last year, according to the latest European Commission (EC) figures analysed by PricewaterhouseCoopers LLP. There has also been a significant increase in the number of mandatory recalls.

By the end of December 2005, an average of two recalls a day were being posted on the EC website, with a total of 706 reports filed at the end of the year. This equates to an overall 126 percent increase in reported recalls since figures were first compiled in 2004 and means that the weekly number of product recalls notified to the EC has increased from an average of six per week in 2004 to 14 per week in 2005. Mandatory recalls (as opposed to voluntary action taken by suppliers) increased by 154 percent from 176 in 2004 to 447 in 2005.

The General Product Safety Directive (GPSD) was introduced in January 2004 to help protect consumers from unsafe products by harmonising and increasing the notification obligation and introducing mandatory recalls on companies in the supply chain that do not take appropriate steps to safeguard consumer safety. Since the introduction of the directive and up until the end of 2005, there have been 1,018 reported product recalls across the European Union (EU).

Analysis by product recall specialists at PricewaterhouseCoopers has placed Hungary and Germany at the top of the EU member recall tables (with 132 and 101 recalls respectively in 2005). However, product recalls in the UK increased by 169 percent from 16 in 2004 to 43 in 2005. This places it in fourth place, after Hungary, Germany and Greece.

Graeme Berry, director in the insurance claims and forensic services practice at PricewaterhouseCoopers, said:

“We predicted a sharp increase in the number of product recalls reported and the latest figures from the EC support this trend. As governments across the EU begin to incorporate the directive into their own regimes, manufacturers are realising how dramatically the legal environment has changed.

“The reported rise in recalls has led to more attention being given to risk management in the supply chain and to increased demand for product recall insurance cover. Increased take-up from manufacturers will be driven in particular by the new regulatory environment, greater transparency and awareness of the risk, and by the penalties for non-compliance. In the UK, the general product safety regulations enacted in October 2005 state that supplying an unsafe product can result in a fine of up to £5,000 for each offence, and/or a term of imprisonment of up to three months.”

www.pwc.com/uk

•Date: 21st Feb 2006• Region: UK/W.Europe • Type: Article •Topic: Retail BC
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