A major consumer watchdog has called for car dealers to be licensed after reports showed that used cars are among consumers' most complained-about purchases.

The Chartered Trading Standards Institute (CTSI), which trains trading standards officers, issued the demand for the first time in its latest manifesto.

Although it couldn't say what form such a system would take or how it would be applied, the proposal is backed by its members, lead officers and key stakeholders.

The CTSI said it was compelled to act by the increase in disputes involving used cars reported by fellow consumer organisation Citizens Advice. 

The proposal comes against the backdrop of challenging times for the UK public, with levels of crime and fraud rising at the same time as spending on Trading Standards departments is falling, said the CTSI.

According to its manifesto, in 2022, an estimated £54 billion of consumer detriment remained unaddressed while a decade of underfunding of Trading Standards has left the consumer protection system "broken".

It claims that in the past four years, it has, together with local Trading Standards offices, prevented car buyers losing £1.9 million to the most complained-about rogue used car traders. 

The CTSI's proposal that dealers should be licensed addresses the fact that anyone can set up in business as a car dealer with few checks. Unscrupulous traders take advantage of this by passing themselves off as private sellers, thereby evading their responsibilities under the Consumer Protection from Unfair Trading Regulations 2008 that protects consumers from unfair or misleading trading practices.

However, dealers that Autocar spoke to doubted a licensing system would discourage this practice, since only legitimate dealers would apply to join it. 

In the absence of a formal licensing scheme, The Motor Ombudsman, a national dispute resolution service, aims to raise standards in the motor industry with its CTSI-approved Motor Industry Code of Practice.

It has also created four additional codes to safeguard consumers: the New Car Code, the Service and Repair Code, the Vehicle Sales Code and the Vehicle Warranty Products Code.

In 2022, its resolution service dealt with 8900 cases, an increase of 39% on the previous year. The majority involved the sale of new and used vehicles and their quality at point of purchase and the standard of service provided post-purchase.

More than 7500 businesses have signed up to the Code of Practice; they can be found in The Motor Ombudsman's online Garage Finder.