Drivers of “nearly new” cars are being put at risk of invalid insurance and breaking the law because some motor traders are retaining log books.
V5C log books record a car’s “registered keeper”.
However, in some cases they are not being updated for several months after cars are sold, a BBC investigation has found.
Some dealers retain the documents to help them qualify for large discounts from car manufacturers.
The National Franchised Dealers Association describe the findings as “concerning” and say bonuses linked to sales might “incentivise” the activity.
The cars affected are “pre-registered,” excess stock sold cheaply by manufacturers to dealers.
They must legally be kept off-road for 90 days before being re-sold. The delays can be even longer if the car was originally registered by a retailer as a business fleet vehicle.
However, in some cases the cars are delivered to new buyers immediately, while the vehicles remain registered at a separate address, an investigation by BBC Radio 4’s You and Yours has found.
Many of the cars are sold on by online car brokers. They commonly disclose the disadvantages in their terms and conditions, explaining that the vehicles will be registered to customers “in due course”.
However, many customers fail to read the small print and some suffer the consequences.
“I couldn’t drive the car because it had been declared off-road”, said buyer Andrew March. “The car log book had been withheld so I couldn’t re-tax it.”
After asking repeatedly for his logbook, motorist James Laddie applied to the DVLA for a new one.
The three-month delay proved expensive: “The council would not transfer our old parking permit to the new car without proof of ownership. The combined cost of parking tickets was about 200.”
Experts stress that there can be potentially more serious consequences of a driver and their car being registered to different addresses.
For example, police speed camera fines are sent to the postal address linked via DVLA records to a car’s registration plate.
One driver who spoke to You and Yours lived in London while his car remained registered for several months in Bolton.
Insurance companies also require drivers to disclose both the owner and the registered keeper of a vehicle.
Roy Rodger, an expert on insurance law who has trained underwriters, warns that drivers’ confusion over withheld log books could lead to costly mistakes.
“In a situation where a driver misled the insurance company over registration details and a serious accident occurred, the driver could be in a very, very awkward position.
“They could have to pay the claim out of their own pocket eventually,” he said.
The Association of British Insurers told You and Yours it was not aware of any cases where this had happened, but added that drivers should inform motor insurers if they are not the registered keeper.
The practice of log books being retained by third party suppliers was highlighted in a 2012 court case brought against a competitor by online car broker Richard Sanders, founder of Drive the Deal.
The competitor had not adequately warned consumers of the risks involved.
Although Mr Sanders won the case, he says the industry has not been fully cleaned up.
“We decided to start looking at this because we were very concerned indeed about the trouble that some consumers would get themselves into,” he said.
“Unfortunately I think the practice of wrongly registering cars on purpose does continue.”
The director of the National Franchised Dealers Association, Sue Robinson, says she is very concerned by the findings.
“As dealers are required to keep vehicles for 90 days to qualify for some bonuses, that could incentivise this type of activity,” she said.
Autocar editorial director, Jim Holder, says transparency in the car industry has improved but problems remain.
“This part of the industry is poorly regulated and there are still traders out there who ignore the rules,” he said.
“It’s not really a problem that the industry takes seriously and it’s really only word of mouth and education that can stop this.”
You and Yours is on BBC Radio 4 weekdays 12:15-13:00 GMT. Listen online or download the programme podcast.
Read more: http://www.bbc.co.uk/news/business-38231138