The traffic may not be moving much faster, but the number of rules and regulations governing the way companies operate their vehicle fleets certainly is. This autumn sees two important developments – the September launch of the Health & Safety Executive’s new guidance on at-work road safety, and possible progress on Home Secretary David Blunkett’s bill on corporate manslaughter. Finance directors may feel these matters can be safely left to directors in functions such as distribution or transport, but there are three good reasons why FDs need to take a more direct interest.
First, it looks certain that if Blunkett gets his way on the corporate killing law, some of the free-and-easy maintenance practices for fleet vehicles will have to change. And – surprise, surprise – the new approach will cost more.
The nub of the problem lies in the little-known fact that HGVs are often sent out on the roads with maintenance disclaimers which state that necessary work has not been completed. “Disclaimers have been the industry norm,” according to David Barlow, managing director of Prohire, a leasing company with more than 1,000 vehicles on hire to blue chips as well as small-time operators. “It’s a get-out-of-jail card the repairer uses if anything goes wrong.”
Under the new legislation, however, if a vehicle with a maintenance disclaimer causes a fatal accident, the leasing company, as well as the end-user, could find itself liable. No wonder Barlow has sent his senior staff on a nationwide tour of the maintenance firms he is using. “Our authorisation procedure has always made it clear that no repairer disclaimers are to be issued,” says Barlow. Prohire is insisting that all repairers sign new contracts which forbid them from sending out vehicles with disclaimers.
Companies that lease vehicles from responsible providers such as Prohire can be certain their leasing companies will take care of the matter. Those who operate fleets directly will have to make sure the issue is legally watertight with their own repairers. Barlow thinks much of the extra cost can be absorbed, but there will be more problems with vehicles (which previously might have been waved out on the road with disclaimers) being held back in the garage. Prohire is investing in more replacement vehicles.
“We have started to increase our vehicle replacement budget but, at the moment, it doesn’t really affect end-users,” he says.
The second reason why finance directors need to take more interest in this is because of their auditing skills. The corporate manslaughter bill retains the right to prosecute individual directors but introduces a new offence – corporate killing. This means the company can be prosecuted, even if it’s not possible to bring charges against individual directors.
A company will be guilty of corporate killing if the prosecution proves there was a management failure; in other words, that the failure “fell far below what can reasonably be expected” and that the management failure caused a death. The company’s assets can be frozen if it seems it might go into liquidation to avoid a fine or compensation.
But the management failure test means there will be a premium on proving that audited procedures were carried out in areas such as vehicle maintenance and driver training. It won’t be enough to maintain the vehicles – the company will have to show the work was done correctly in order to mount a robust defence.
This raises the third reason why FDs should focus on the issue. Management failure is often likely to lead to the boardroom if the board hasn’t laid down proper processes for handling all aspects of at-work road risk. This is where a study of the new HSE guide will come in useful.
According to Juliette Bell, an officer of the Fleet Safety Forum, the guide focuses on what’s already best practice in the industry. “There are four key areas you need to look at,” she says. “The first is setting up your at-work road safety policy. Next, you need to carry out a risk assessment. Then you need to deal with driver issues such as tiredness and speeding. Finally, make sure all journeys are necessary and carried out by the most effective route.”
It looks as though the HSE guidance and the threat of corporate killing is stimulating a lot of companies into action. Bell reckons that membership of the 1,000-strong Fleet Safety Forum will increase by 200 companies this year.
After a number of high-profile accidents in which company directors walked away scot-free, it seems the government is determined to mount a successful prosecution. According to sources in the fleet business, law enforcers will be looking for a high-profile case to test the new law, and being caught in that trap could make a traffic jam seem like fun.