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  • What is the vehicle entry certification process?

    All vehicles entering New Zealand must be checked, certified, registered and licensed before you can use them on the road. This process is called entry certification.

    Only approved testing stations can carry out entry certification inspections.

    The process involves an entry certifier:

    • verifying that the vehicle met the required safety emissions and frontal impact standards when manufactured
    • carrying out a vehicle inspection to verify it is still in good condition
    • deciding whether the vehicle needs any repairs and/or specialist certification to meet legal safety requirements
    • certifying that the vehicle meets safety and emissions requirements
    • verifying who legally owns the vehicle.
    • verifying the vehicle's identity and that it has a valid VIN assigned and affixed.

    Where the vehicle meets requirements, the entry certifier issues:

    • a registration application form (form MR2A),which verifies that it has passed these checks and is safe for you to drive, and
    • a warrant of fitness or certificate of fitness, depending on the vehicle’s size.
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  • What changes are being proposed?

    The proposed policy changes include:

    • clarification on the definition of ‘conflict of interest’;
    • strengthened controls for appointing used vehicle entry certification inspectors and organisations to avoid these conflicts of interest; and
    • making sure that all vehicle inspectors and organisations have an ongoing duty to tell us about any conflicts of interest that arise

    Proposed changes to avoid certain conflicts of interest include used vehicle entry inspectors and certifiers, and people or organisations applying to become used vehicle entry inspectors and certifiers (including anyone who effectively controls the person making the application) would not be allowed to:

    • certify vehicles they have an ownership interest in
    • carry out entry inspections of any vehicles that they or someone linked to them has previously inspected at the border

    This is an important part of ensuring New Zealand has a safe land transport system that the public can have confidence in.

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  • What is a conflict of interest?

    A ‘conflict of interest’ means a situation where a person applying to us to carry out vehicle inspection or certification activities is or could be influenced or could reasonably be perceived to be at risk of being influenced, by professional, financial or personal interest in key parts of the vehicle entry and certification supply chain. In other words, a conflict of interest includes an actual, potential, or perceived conflict of interest. 

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  • What is the current framework for managing conflicts of interest in the sector?

    The Transport Agency appoints vehicle inspection organisations under the Land Transport Rule: Vehicle Standards Compliance 2002 (Rule).  Under the Rule the Transport Agency can give weight as it considers appropriate to the applicant’s degree of financial or professional interest in importing or selling vehicles or vehicle parts, or in modifying or repairing vehicles; and the extent to which that interest, if any, is counterbalanced by other relevant factors.

    The Rule recognises that conflicts of interest may be an important or decisive factor for determining the suitability of inspecting organisations and vehicle inspectors, and requires the Transport Agency to take these into account.  Inspecting organisations may also be obliged to avoid, report, or manage conflicts of interest under their deeds and/or notices of appointment.

    The Transport Agency’s current operational policy relevantly provides, in relation to assessing potential conflicts of interest, that:

    • The Transport Agency will appoint vehicle inspectors and inspecting organisations to different categories of inspection and certification activities in ways that seek to ensure potential harms presented by any conflicts of interest are avoided.  In some situations a conflict of interest may be sufficient grounds on its own for declining an application for certain activities.
    • Used vehicle entry certification and border inspection are categories of inspection that require particular scrutiny from a conflicts of interest perspective.  Persons applying to carry out these types of inspections must demonstrate that those activities will be separated from other related services.

    An entry certifier (including parent and subsidiary organisations) must not have any ownership or financial interest in the vehicles being entry certified, unless they can demonstrate to the satisfaction of the Transport Agency that a transparent and robust system is in place to negate any (real or perceived) conflict of interest, and to ensure accurate assessment of each vehicle is still undertaken.

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  • Why are we doing this now?

    The Transport Agency’s Board has decided that the Transport Agency will take a hard look at its approach to managing conflicts of interest within the sectors it regulates. This work is ongoing.

    The current policy was last updated in 2014. At the time the policy was created, some integration of the used vehicle supply chain was anticipated and taken into account, but not to the extent that has subsequently occurred.

    As a result, the Transport Agency has reviewed the operational policy and is consulting on this to seek feedback on the proposed changes.

    As part of its consideration of these issues, the Transport Agency identified an immediate concern regarding the current approach to used light vehicle entry certification. The reasons for identifying this immediate concern include:

    • As the operational policy already acknowledges, because used vehicles entering or re-entering the New Zealand fleet all have their own histories relating to maintenance, usage, accident record, and component replacement, the Transport Agency requires greater assurance that any financial, personal, or professional interest in selling, or importing vehicles or vehicle parts, or repairing or modifying vehicles held by border inspectors or vehicle certifiers will not compromise standards of border inspection or entry certification. Entry certification for used light cars is assessed as requiring particular scrutiny given the high volume of such cars, vertical integration within the sector, and the high value to importers if repairs are avoided or damage not noted.
    • The Transport Agency received feedback that it should change its approach to assessing conflicts of interest relating to used vehicle entry certification. Some of this feedback focused on concerns relating to a specific case of a group of companies (owned by a holding company) which respectively import used vehicles, and carry out border inspection and entry certification for the same vehicles. This feedback indicated to the Agency that there was a higher level of vertical integration within the importation and entry certification industries than existed at the time the current policy was adopted. The Transport Agency was asked to reconsider its policy on whether an entry certifier should be able to certify vehicles that it has a financial or ownership interest in.
    • The Transport Agency has formed a view that the current approach may no longer be sufficient to eliminate improper conflicts of interest from used vehicle entry certification. The initial view which the Transport Agency is consulting with the industry on is that the Agency should no longer permit an inspection organisation to carry out entry certification activities for vehicles if that inspection organisation (or a related party):
      • has an ownership interest in the vehicles; or
      • has conducted border inspections for the vehicles.

    The proposed changes to the policy would clarify that in assessing these types of conflicts of interest, the Agency considers that they must be avoided rather than simply managed. This is because it may not be possible to eliminate the risk that these types of conflicts of interest could improperly affect (or appear to affect) vehicle entry certification decisions. Further there is a risk to public confidence in the regulation of the sector if vehicle entry certification is carried out by inspection organisations that have an ownership interest in the vehicles they are certifying.

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  • How would the proposed changes affect existing inspection organisations?

    The changes to the policy would be prospective, which means they will apply to future activities. Policy changes that relate to applications to carry out certification functions would apply to applications in the future (including applications for renewal), and would be reflected in any new deeds or notices of appointment. Whether such changes may affect an organisation during their existing term of appointment will depend on the terms of their deed or notice of appointment.

    The proposed changes to the policy would not prohibit an entry certifier, or a related entity, from importing used vehicles or carrying out border inspection services. Instead the changes would require that the entry certifier does not certify vehicles which it (or a parent or subsidiary) has an ownership interest in, or which it (or a related party) has conducted border inspection services for.

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Questions and answers – submission process

  • When would changes to the policy come into effect?

    We expect to announce the results of the consultation and any new policy between July and September 2019. We will confirm our announcement date at least one month in advance.

    We expect that any new policy would take effect from 31 December 2019, when the currently existing deeds and notices of appointment expire.

    The Transport Agency expects to call for and decide new appointment applications between October and November 2019. New appointments would be effective 31 December 2019. The Transport Agency will ensure that the reappointment process for certifiers is workable, sensible and takes into account the magnitude of any change.

    The indicative timeframes proposed by the Transport Agency are summarised below.

    Policy development Consultation closes 22 March 2019
    Submissions and impact analysis April – June 2019
    Further policy development based on submissions analysis
    Publish summary of submissions July – September 2019
    Announce policy changes (if any)
    Implementation Confirm appointment process for new deeds and notices of appointment, and impact of new policy (if any) September 2019
    Transport Agency seeks new appointments October 2019
    New appointments notified November 2019
    New appointments effective 31 December 2019
    New policy (if any) takes effect 31 December 2019

     

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  • How will you ensure commercially sensitive information remains confidential?

    Submissions closed on 22 March 2019. Your submission will be held by the Transport Agency under the Official Information Act 1982 and may become publicly available. If you reasonably identified information in your submission as confidential or commercially sensitive, the Transport Agency:

    • confirms that it will treat the information as confidential and so will not release the information voluntarily; and
    • confirms its understanding that your information likely can be withheld under sections 9(2)(ba)(i) and 9(2)(b)(ii) of the Official Information Act 1982.

    This also applies to any submissions presented verbally, so we will ask a submitter to clearly state when they are referring to confidential or commercially sensitive information during their submission presentation.

    Note that any decision of the Transport Agency to withhold your information under the Official Information Act 1982(external link) is subject to correction by the Ombudsman, who can require that the Transport Agency release your full information.

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