The UK’s Office of Fair Trading has warned second-hand car dealers that engaging in unfair or improper trading practices such as 'clocking' cars and supplying unroadworthy vehicles could jeopardise their consumer credit licences.

Under the Consumer Credit Act 1974, businesses that offer consumer credit or hire must have a consumer credit licence and the OFT monitors the fitness of licence holders.

In a statement, the OFT said the motor trade accounted for nearly a third of all licensing action in 2002. The main problems identified in the secondhand car market were incorrect mileage readings, difficulty in establishing ownership of vehicles, faulty mechanical conditions of vehicles and poor after-sales care.

New guidance issued by the OFT sets out clearly types of behaviour that will call into question a licence holders fitness. It is aimed primarily at secondhand car dealers but where appropriate also applies to new car traders. The guidance covers issues such as vehicle roadworthiness including altering the construction of a vehicle (e.g. 'cutting and shutting' two halves to make one whole vehicle) and providing stolen or fraudulent MOT [the UK’s compulsory annual safety test] documents; false or misleading descriptions - including verbal claims, altering mileage odometers and misrepresenting the specification or history of a vehicle; vehicle ownership such as supplying a vehicle with an outstanding finance agreement or a 'cloned' vehicle (stolen car with number plates from a legitimate vehicle) and traders claiming to be private sellers.

John Vickers, director general of Fair Trading said: 'It is vital for consumers and honest car dealers that dishonest traders are kept out of the market. Our guidance explains how we will use our credit licensing powers to help achieve this. At the same time we urge consumers to take care who they do business with.”