Interconnected regulations will raise product recall compliance risk across Europe, warns Sedgwick

Sedgwick warns that new interconnected European regulations coming down the track will complicate product recall risk and compliance. The company’s European Recall Index Q3 report, which tracks the extent of regulatory activity in Europe and the UK set to impact manufacturers and their supply chains, says regulators are focused on sustainability, fostering innovation across sectors and measures to make online shopping safer for consumers. “Artificial intelligence and cybersecurity also remain a priority as regulators work to balance technological advancement with product safety and data security,” Sedgwick says. It goes on to warn about compliance issues raised by the number of European regulations in the pipeline that build on each other, such as extended producer responsibility rules and proposed rules supporting the European Green Deal and Circular Economy Action Plan. In particular, the report highlights the different approaches to regulating AI at both national level, and via the EU’s AI Act, with specific guidance for medical device and consumer products. “The risk of a misstep in maintaining compliance may increase for businesses as the web of interconnected regulations continues to grow,” Sedgwick says. Chris Occleshaw, international product recall consultant at Sedgwick, adds. “As product recalls increase across industries and the number of regulations continues to grow, businesses face a complicated risk landscape with little margin for error.” “In the lead up to 2024, a strategic and well-planned approach to product safety and in-market challenges will set businesses on the right foot as we step into a new year,” he says. In a guest article, Alex Geisler, partner at law firm Duane Morris, says new regulations pose the greatest risk to businesses when they accumulate or build on existing rules. “In analysing the operational risk associated with new regulations, it is rarely a single change that creates a new hazard. Most often, it is the cumulative effect of multiple revisions,” he says. This is particularly true for the EU’s new General Product Safety Regulation (GPSR), which updates rules to give consumers more choice when there is a product safety recall. Geisler says the changes “create a dilemma for automotive original equipment manufacturers (OEMs) and supply partners”. Manufacturers that recall products will have to offer consumers at least two options between repair, replacement and full refund. “For a mobile phone battery, a leaky can of cola, or a child’s toy, that might be perfectly feasible. But for economic operators involved in producing vehicles with multiple complex parts, this is potentially disproportionate and onerous,” warns Geisler. In addition, manufacturers will be required to carry out internal risk analysis before products are put on the market. They will then need to develop technical documents that attest to the product’s safety, possible risks and solutions adopted to mitigate the risks, including the results of tests by the manufacturer or a third party. “It has long been common practice for manufacturers of parts, systems and complete products to assess and document the ‘safety case’ of what they manufacture. The changes to the GPSR are an attempt to codify this practice and to create a level of shared responsibility along the entire supply chain,” Geisler explains. “Supply chain partners have an obligation to confirm the manufacturer’s compliance with the regulation,” he says. “In practical terms, all manufacturers will have to ensure they have robust processes to comply with the risk assessment requirements, have their work validated, and keep careful records in the event they need to support their claims or defend their systems,” Geisler adds. Sedgwick’s report finds that product recalls hit their highest level in more than ten years across five key sectors in Europe during the third quarter of 2023. Sedgwick says the quarter marks the fifth consecutive increase in product recalls across Europe. Recalls rose 3% in the period, with 3,337 notifications, which tops the existing record set in the previous quarter.

Interconnected regulations will raise product recall compliance risk across Europe, warns Sedgwick

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