2023 was a record-breaking year for European product recalls

March 25, 2024

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European product recalls grew 15.6% year-over-year in 2023, marking the fifth consecutive year that recalls have increased in five key European sectors. According to Sedgwick brand protection’s 2024 European State of the Nation Recall Index report, the 12,498 total recall events in 2023 broke the previous record of 10,545 events that was set in 2022.

This special edition of Sedgwick’s European Recall Index report goes beyond its traditional quarterly reviews, offering a year-in-review analysis of 2023 recall data and product safety trends. The report also provides essential insights and predictions from Sedgwick’s brand protection experts and network of strategic partners on the legal, regulatory, and economic risks facing the automotive, consumer product, food and drink, medical device, and pharmaceutical industries in 2024.

2023 product recall trends in review

Although we noted last year that the rapid post-pandemic growth in recall activity may be slowing down, 2023 data suggests that may not be the case. The total number of product recalls grew just 4.1% from 2021 to 2022, but that growth more than tripled from 2022 to 2023. The surge in European recalls in 2023 was driven by an increase in events in the medical device, pharmaceutical, electronics, clothing, and food and beverage industries. The automotive and toy industries were the only sectors to see recalls fall.

How 2023 recalls compared to the previous year

  • Even though automotive recalls fell 3.3% from 2022, the 727 events in 2023 were still the second-highest number of recalls recorded in the past ten years. 2023 was the only year on record to have two quarters with more than 200 recall events. Injuries were the leading cause of European automotive recalls in 2023, accounting for 75.1% of events.
  • European food and beverage recalls reached a ten-year high in 2023 with 4,837 events. Contamination (non-bacterial) was the leading cause of recalls, accounting for 1,990 events (41.1%), and fruit and vegetables was the most impacted category in 2023.
  • Recalls in the pharmaceutical sector increased 7.7%, from 311 in 2022 to 335 in 2023. Safety concerns were the leading cause of recalls in 2023 with 107 events, followed by foreign materials/contamination and mislabelling. At 78 events, France submitted the highest number of recall notifications in 2023.
  • The European medical device sector had 3,306 recalls in 2023, a ten-year high and 20.0% more recall events than in 2022. This was largely attributed to Q3 2023, which saw 900 recalls, the highest quarterly figure recorded in over three years. France also issued the most recall notifications for the medical device industry with 780 events.
  • In 2023, electronic recalls surged 48.6% to 538 events, up from 362 in 2022. This marks a third consecutive year of growth and a ten-year high for the sector. Lighting chains were the most recalled electronic product in 2023 for the second consecutive year.
  • The number of European toy recalls fell 18.4%, from 621 in 2022 to 507 in 2023. This decline was largely attributed to Q4 2023, which recorded fewer recalls than we typically see in the final quarter of the year. As with previous years, plastic dolls were the most recalled toy product in 2023.
  • There were 286 European clothing recalls in 2023, marking the highest annual total since 2015 and a 19.7% uplift from 2022. The sector’s growth was notably driven by a surge in Q2 2023, which saw 117 recalls. Only five other quarters in the past ten years have surpassed 100 events.

Looking ahead to 2024

Regulators across the EU and UK continue to enact layers of regulations to protect the environment as well as public safety. Companies will need to be aware of not only their own actions but the operations and practices of their entire supply chain. Moreover, consumers are increasingly demanding greater transparency and information regarding product manufacturing and advertising, prompting regulators to introduce new measures addressing advertising and labelling practices.

We are also seeing increased enforcement against anticompetitive behaviour and cartel activity across sectors and geographic borders. Simultaneously, the EU is in the process of modernising existing regulations, while the UK builds its own regulatory framework independent of the EU. Against this backdrop, numerous ongoing global economic and political challenges persist, adding further complexity to the risk landscape.

With 2024 forecasted to be a busy regulatory year, businesses may find themselves fighting an uphill battle if they don’t plan and prepare for in-market product crises. We also expect regulator and consumer scrutiny of product safety and the practices of businesses throughout the entire product lifecycle to continue increasing, which could compound existing challenges. Comprehensive and well-tested recall and crisis plans will be key for businesses hoping to stay on level ground.

The European Recall Index is published every quarter by Sedgwick’s brand protection experts. It is the only report that aggregates and tracks recall data across the UK and EU to help industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.

To download your copy of the latest European Recall Index report, click here.

Chris Occleshaw – Recall Consultant

U.S. product recalls reach seven-year high in 2023

March 22, 2024

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U.S. product recalls increased 10.6% year-over-year in 2023, marking a seven-year high according to Sedgwick’s 2024 State of the Nation Recall Index report. Across the five key industries tracked by Sedgwick, there were 3,301 recall events in 2023.

The number of defective units recalled in 2023 did not pass the one billion threshold, as seen in the previous two years, but there were still 759.36 million units recalled for the year. While this is a 48.7% decrease from the number of defective units recalled in 2022, it is still a significant amount. And with the number of recall events steadily increasing for two consecutive years, companies need to remain vigilant about product safety.

This special edition of Sedgwick’s Recall Index report goes beyond its traditional quarterly reviews, offering a year-in-review analysis of 2023 recall data and product safety trends. The report also provides essential insights and predictions from Sedgwick’s brand protection experts and network of strategic partners on the legal, regulatory, and economic risks facing the automotive, consumer product, food and drink, medical device, and pharmaceutical industries in 2024.

Electric vehicles remain priority but face roadblocks to adoption

Policymakers and regulators pushed to advance the transition to electric vehicles (EVs) in 2023, whether by working to develop a national charging infrastructure, offering tax incentives, or proposing new federal vehicle emissions standards for several classes of vehicles. Despite these efforts, consumers are hesitant to embrace the transition to EVs and dealers feel unprepared to sell or service EVs. Automakers will be faced with the challenge of manufacturing vehicles that meet consumer demand and achieve compliance with the federal push for lower vehicle emissions. Autonomous vehicles (AVs) will likely remain a key focus in 2024 as regulators scrutinize their development and consider new safety rules for AV technology. Automotive recalls fell 4.1% in 2023, the second consecutive year that recalls have declined. Conversely, the number of units recalled increased 23.1% year-over-year.

Consumer product regulators had a busy year in 2023

The Federal Trade Commission (FTC) had a busy year protecting consumers in 2023, enforcing several of its policies, including challenging the use of “Made in America” labels, cracking down on companies that use deceptive advertising practices and false claims, advancing its revised “Green Guides” for promoting eco-friendly products, and acting on junk fees. Likewise, the Consumer Product Safety Commission (CPSC) was busy improving consumer awareness about product recalls and seeking penalties for companies that failed to report suspected safety issues properly. The CPSC also continued to use more public avenues, like unilateral press releases, as a tool to advance consumer safety. With all the regulatory activity this year, it is no surprise that consumer product recalls reached a 10-year high in 2023, with 322 events. The number of units impacted also reached a seven-year high, and 2023 was a record year for fines, with $55.3 million issued by the CPSC.

FDA focused on clarity for consumers and its own restructuring in 2023

The U.S. Food and Drug Administration (FDA) was still recovering from the 2022 infant formula recall crisis in 2023, and issued several updates, recommendations, and warning letters to industry stakeholders throughout the year to get product safety for the category back on track. The agency also continued to work through the restructuring of its Human Foods Program (HFP). In December, the new HFP deputy commissioner announced the program’s priorities would be to prevent foodborne illness, decrease diet-related chronic disease, and safeguard the food supply. Another key issue for the FDA was food labeling, which the agency addressed with recommendations for plant-based milk alternatives, new guidance on the use of Dietary Guidance Statements in food labeling, and its Compliance Policy Guide regarding major food allergen labeling and cross-contact. There were 506 FDA food recalls, a five-year high for the industry and 19.6% more events than were recorded in 2022. U.S Department of Agriculture (USDA) recalls also increased, rising 41.3% year-over-year, from 46 events to 65.

Pharmaceutical industry saw many changes resulting from 2022 legislation

The Consolidated Appropriations Act, 2023 (H.R. 2617) brought about many changes for the pharmaceutical industry, primarily through provisions in the Food and Drug Omnibus Reform Act of 2022 (FDORA) and the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). MoCRA will impose stricter oversight so that cosmetics are regulated in a similar way to pharmaceuticals and other products under the FDA’s purview, requiring manufacturers to make changes to their operations to achieve compliance. Other changes resulted from the end of the federal COVID-19 public health emergency, although some policies the FDA implemented during the pandemic are being adopted on a permanent basis. The pharmaceutical industry broke a significant record for product recalls in 2023, reaching a 15-year high and increasing 42.4% from 2022 to 2023. In contrast, the number of units impacted fell 82.6% to 98.51 million in 2023, from 567.35 million in 2022.

FDA had a full 2023 agenda for the medical device industry

While the FDA did not have a consistent focus throughout 2023, it made several moves that could change how the industry is regulated going forward. In March, the FDA granted marketing authorization to an infant sleep system as a medical device instead of a consumer product, which experts speculate could impact the basic definition of a medical device going forward. The agency also took an interest in the role of technology in the industry, publishing guidances around continuing and expanding the use of telehealth platforms and at-home-use medical technologies. Looking ahead, the FDA has indicated it will provide guidance on issues relating to digital health technologies—including artificial intelligence, wearables, virtual reality, and remote patient monitoring—through the creation of a Digital Health Advisory Committee. Medical device recalls rose for the second consecutive year to 975 events. Three out of four quarters were dominated by recalls for quality-related incidents, which is the first time quality has been the leading cause of recalls for even a single quarter since the beginning of 2016.

Looking ahead

Strict regulatory enforcement is no longer a passing trend but is now a reality that businesses in all industries must contend with. The pressure is on from regulators, policymakers, and consumers for businesses to ensure the highest standards of product safety or face reputational damage, regulatory scrutiny, monetary damages, and even lawsuits. To weather this growing storm, businesses will need to prioritize their planning and preparation for in-market product crises. 

The U.S. Recall Index is published every quarter by Sedgwick’s brand protection experts. It is the only report that aggregates and tracks recall data across the U.S. to help automotive, consumer product, food and drink, medical device, and pharmaceutical industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.

To download your copy of the latest Recall Index report, click here.

Chris Harvey – Senior Vice President, Brand Protection

UK Government reaffirms principles-based approach to regulating AI

March 19, 2024

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The UK government has published its response to the consultation on its 2023 AI White Paper that outlined its planned “pro-innovation approach” to regulating artificial intelligence (AI). The detailed response largely reiterates the approach that was outlined in the AI White Paper but also provides further information about how the context-based regulatory framework will unfold.

Key details

The response paper reaffirms the five cross-sectoral principles for existing regulators that were outlined in the white paper. These are intended to be interpreted and applied by regulators within their sectors to drive safe, responsible AI innovation and include:

  • Safety, security, and robustness
  • Appropriate transparency and explainability
  • Fairness
  • Accountability and governance
  • Contestability and redress

While the government noted its decision would remain under review, it plans to move forward with these principles under a non-statutory basis, at least as it establishes its approach. The onus will remain on existing regulators to apply the principles within their sector-specific frameworks, and the UK government will not create a central regulatory body for AI. However, the government will establish a central function that will “monitor and assess risks across the whole economy and support regulator coordination and clarity.”

To help regulators interpret and apply the AI principles, the UK government released voluntary guidance that can be followed at the regulator’s discretion. A £10 million fund to help “jumpstart regulator’s AI capabilities” was also announced in the government’s response paper.

While the government’s current approach to AI regulation is non-statutory, it does note in the response paper that future regulation may be necessary for specific AI uses or as the technology advances. It is also worth noting that the UK may have a new government by the end of 2024, which could adopt its own, different regulatory approach to AI. For example, the Labour party has indicated it would prefer to implement “an overarching regulatory framework” for AI.

Looking ahead

Some UK regulators have already taken steps to better define how AI uses in their sectors are regulated, and more are sure to follow in the coming months. While the context-based approach adopted by the UK will allow for innovation, the decentralized nature of how AI is regulated could create challenges for businesses that answer to multiple regulatory bodies. Businesses will need to closely follow all applicable regulatory developments to ensure they maintain compliance.

For businesses that operate in the UK and elsewhere in the European Union, the diverging regulatory approaches may bring confusion and complicated risks. It will be challenging but necessary to keep up to date on all relevant regulations to avoid reputational damage or regulatory oversight. Engaging with lawyers and third party brand protection experts can bring an added layer of protection amidst the ever-changing AI landscape.

Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 7,000 of the most time-critical and sensitive product recalls in 100+ countries and 50+ languages, over 25 years. To find out more about our product recall and remediation solutions, visit our website here.

Chris Occleshaw, Recall Consultant

FDA works to harmonize U.S. medical device manufacturing requirements with international standards

March 14, 2024

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On January 31, 2024, the U.S. Food and Drug Administration (FDA) issued a final rule to help harmonize certain U.S. manufacturing requirements for medical devices with the international standards used by most other countries. The long-awaited move amends current good manufacturing practice (cGMP) provisions of the Quality System Regulation (QSR) under 21 CFR 820

The final rule does not substantially change the existing requirements but incorporates the International Organization for Standardization’s (ISO’s) requirements for medical device quality management systems, known as ISO 13485. The FDA will retain the scope of the QSR while amending many of its provisions to align with ISO 13485. The rule will be renamed as the Quality Management System Regulation (QMSR) and the FDA has established additional requirements and provisions to clarify portions of ISO 13485.

Notable change

Most changes to the old rule are to align the updated QMSR with existing FDA definitions and requirements, which will require minimal action from manufacturers. However, there is one new requirement that could necessitate further action to maintain compliance.

The FDA has added the requirement that an “organization shall document one or more processes for risk management in product realization. Records of risk management activities shall be maintained.” Risk management has been a growing focus for the FDA across the industries it regulates, with the agency going so far as to release a final guidance on preparations companies should make to be “recall ready.”

While risk management activities were previously addressed in 21 CFR 820, FDA spokesperson Kristina Wieghmink noted that “in adopting ISO 13485, the QMSR incorporates risk management throughout its requirements and explicitly emphasizes risk management activities and risk-based decision making as important elements of an effective quality system.”

Expanding the risk management requirement to the entire product lifecycle will help ensure greater safety for patients using medical devices. It will also prompt companies to take a more proactive approach to risk management, which can have better outcomes for protecting brand reputation and the company’s bottom line.

Next steps

Given the minimal new requirements that will result from the FDA’s final rule, most companies will not need to make significant changes to their operations to achieve compliance, especially if they already operate internationally under ISO 13485 and under the QSR in the U.S. Companies who only operate in the U.S. market and have not adopted ISO 13485 will have a higher burden of compliance as they make updates to meet the QMSR requirements.

With the effective date set for February 2, 2026, companies should start adjusting their operations to ensure they are in compliance with the QMSR. Given the bigger role that risk management will play under the QMSR, companies should consider whether working with a third party partner is a necessary step to ensure they are covered through the entire product lifecycle. At a minimum, medical device manufacturers and distributors should assess their current risk management plans and determine if there are weaknesses that could be addressed.

Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 7,000 of the most time-critical and sensitive product recalls in 100+ countries and 50+ languages, over 25 years. To find out more about our product recall and remediation solutions, visit our website here.

Matt Walker, Recall Consultant

UK MHRA releases roadmap for its forthcoming medical devices regulation overhaul

March 1, 2024

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As the UK continues to develop its own regulatory framework after leaving the European Union, it appears that the medical device industry will be next to see new legislation. The UK Medicines and Healthcare products Regulatory Agency (MHRA) released a roadmap for new regulations in January 2024, outlining the next steps in developing a new framework for medical devices.

The MHRA has been working on new medical device regulations for several years, having originally launched the process with a public consultation in 2021. In the interim, the UK has been operating under the outdated Medical Devices Regulations 2002, which implemented 1990s EU legislation. In announcing the new regulatory roadmap, the MHRA identified three core goals: put patient safety first and help to ensure that patients continue to have access without delay to devices they need; enhance the UK’s position as a world-leading environment for medical technology innovators; and deliver greater international harmonisation.

Key details of the roadmap

The MHRA will roll out new regulations via a series of Statutory Instruments (SIs), starting with regulations for Post-Market Surveillance (PMS) in 2024. The draft PMS SI is in the final stages of the legislative process, and the UK government intends to publish the final SI in early 2024 and expects it to apply near the end of the year. The draft PMS SI that was released last July outlines several key measures, including:

  • Details for what must be included as part of a PMS system, including the methods for collecting PMS data to support improved capturing of PMS data and harmonisation across manufacturers.
  • Enhanced serious incident reporting obligations for manufacturers to support the detection of safety issues sooner.
  • More stringent requirements for manufacturers to conduct periodic reviews of their PMS data, including for implantable medical devices. These requirements aim to support manufacturers in earlier detection of trends/signals that may have an impact on the safety of a medical device.

The MHRA plans to release other core regulations in 2025, which will make up the bulk of the regulatory framework. As identified by the MHRA, the future core regulations will:

  • Introduce improvements for implantable medical devices.
  • Ensure devices have a unique device identifier (UDI).
  • Change the classification of several types of devices.
  • Strengthen the requirements for quality management systems and technical documentation.
  • Include new requirements for the claims manufacturers can make about their medical devices, requiring them to align with their statement of intended purpose.
  • Bring the essential requirements for medical devices being placed on the market in Great Britain into greater alignment with those of the EU.

The medical device industry will have the opportunity to share input on the future regulations, as the MHRA will hold stakeholder discussions in early 2024. The industry should begin reviewing the roadmap and other draft documents released by the MHRA as they await final guidance. Companies who operate in the UK and EU markets should also start considering how the UK regulatory framework is likely to prompt changes in their manufacturing and quality control processes.

Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 7,000 of the most time-critical and sensitive product recalls in 100+ countries and 50+ languages, over 25 years. To find out more about our product recall and remediation solutions, visit our website here.

U.S. quarterly recalls fall in Q3 but remain on track to reach five-year high for 2023

December 8, 2023

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U.S. product recalls fell more than 10% in the third quarter of 2023, the largest quarterly decline recorded in over three years according to Sedgwick’s latest Recall Index report. Despite this decrease, 2023 still remains on track to hit a five-year high for total recall events.

The number of recall events fell from 856 in Q2 2023 to 740 in Q3 2023, a decrease of 13.6%. U.S. industries also saw the number of defective units recalled decline in Q3 2023, falling a more significant 61.9% from the previous quarter and bringing the total number of units recalled in 2023 to 528.7 million. While this makes it unlikely that 2023 will be the third consecutive year to exceed more than one billion units recalled, it is not impossible; each of the past three years experienced a single quarter with more than 400 million units recalled.

In this latest edition of the Index report, Sedgwick’s brand protection experts analyze recall data from the third quarter of 2023 and preview the fourth quarter with key insights from October. In addition, to assist stakeholders in preparing for regulatory changes and evolving product safety risks their industry may encounter in 2024, the Index report also provides key analysis and guidance from our strategic partners at leading U.S. law firms.

Automotive industry juggles EV uptake issues and evolving regulations for AVs

While research suggests consumers are interested in buying electric vehicles (EVs), significant obstacles remain for EV sales to truly take off. Consumers are wary about a lack of national charging infrastructure and the higher costs associated with EVs, while dealers are concerned they do not have the knowledge necessary to sell or service these vehicles. It remains to be seen how automakers, regulators, or lawmakers will address these obstacles. However, lawmakers have set a clearer path forward for their oversight of autonomous vehicles (AVs) with Congress taking steps to advance rules specifically designed to regulate AVs. Automotive recalls decreased 15.8%, from 234 in Q2 2022 to 197 in Q3. The number of units impacted also fell 3.6% from Q2, to 7.9 million units in Q3. Reflecting the sectors shift to electrification, electrical systems were the leading cause cited for the third consecutive quarter. Download your copy of the Index report to discover more.

Consumer product regulators continue heightened enforcement activity 

The Consumer Product Safety Commission (CPSC) has continued its aggressive approach to its enforcement responsibilities, especially against companies that fail to promptly report suspected safety issues. The Federal Trade Commission (FTC) has followed suit, increasing scrutiny over fake reviews and other actions that harm consumers. The use of artificial intelligence (AI) in consumer products and beyond has also caught the attention of regulators, who will likely begin work on industry-specific rules soon as they receive more guidance from lawmakers on how the technology should be regulated. The number of consumer product recalls fell 14.5% from the previous quarter, while the number of units impacted decreased a more significant 58.0%. The CPSC issued fines in excess of $20M in Q3, pushing the year-to-date total to $55.3M, which exceeds the total annual fines for all other years on record. Download your copy of the Index report to discover more.

FDA turns focus to food additives and continued food safety improvements

In the third quarter, the Food and Drug Administration (FDA) took several actions to strengthen the safety, resiliency, and oversight of the infant formula industry. The agency issued warning letters to three infant formula manufacturers in August, and in September issued an update on its strategy to help prevent Cronobacter sakazakii illnesses associated with consumption of powdered infant formula. The agency may also be preparing for an overhaul of its food additive regulations, issuing a first of its kind public inventory of ingredients that do not qualify as “generally recognized as safe (GRAS).” In the months since, the FDA and states like California and New York have taken additional steps to reevaluate which food additives are allowed in the U.S. In Q3, FDA recalls fell from 153 in Q2 2023 to 131, while the number of units impacted decreased 64.8%. Notably, the U.S. Department of Agriculture (USDA) was the only industry where the number of recalls increased in Q3 2023, from 17 in Q2 to 18. The number of pounds recalled by the USDA also increased to 467,811 pounds, 27.9% more than the previous quarter. Download your copy of the Index report to discover more.

FDA may increase scrutiny of medical device industry

The FDA is seeking to increase patient access to at-home-use medical technologies to give patients more power to manage their own care. However, the increased use of at-home technologies could encourage some manufacturers to position their products as having more capabilities than those for which they have been approved. The FDA has indicated it is prioritizing enforcement around “intended use creep,” issuing three new guidances around its 510(k) Program and sending two warning letters to companies for claims outside their approved uses. The medical device industry saw recall events fall 7.9% from the previous quarter, with quality concerns remaining the leading cause. The number of units impacted fell a more significant 63.1%, from 66.4 million in Q2 2023 to 24.5 million in Q3. Download your copy of the Index report to discover more.

FDA seeks to regulate cosmetics in same manner as drugs

Cosmetics manufacturers may soon face regulations that mirror those currently existing for drugs following the passage of the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). The FDA has issued draft guidance to help companies adapt to the new regulatory landscape, offering clarity around certain definitions and helping with submitting necessary listings and registrations. The FDA is also working to clarify promotional materials that accompany drug products, issuing a final guidance for how manufacturers and marketers should present certain information in Direct-to-Consumer labeling and advertisements. The number of pharmaceutical recalls fell from 135 in Q2 2023 to 107 in Q3, a decrease of 20.7%. Despite this decline, 2023 remains on track to reach a ten-year high in terms of pharmaceutical recall events. Download your copy of the Index report to discover more.

Looking ahead

As 2023 comes to a close, companies will find themselves preparing for another year with continued regulatory scrutiny and enhanced enforcement activity. While recall data may fluctuate quarter to quarter, recent yearly trends indicate that recall activity is on the rise, especially as both consumers and regulators pay closer attention to product safety. New technology across industries, whether that be AI or AVs, will also introduce new risks for manufacturers and companies throughout the product lifecycle. With the ever-evolving risk landscape, it is never too early to prepare for an in-market product crisis. 

The U.S. Recall Index is published every quarter by Sedgwick’s brand protection experts. It is the only report that aggregates and tracks recall data across the U.S. to help automotive, consumer product, food and beverage, medical device, and pharmaceutical industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.

To download your copy of the latest Recall Index report, click here.

European product recalls increase for fifth consecutive quarter

December 7, 2023

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The number of European product recalls increased in the third quarter of 2023 for the fifth consecutive quarter, according to Sedgwick’s latest European Recall Index report. Across the five industries tracked in the report, there were 3,227 recalls in Q3 2023, which marks the highest level of recall activity in a single quarter for more than ten years. This tops the record previously set in Q2 2023. 

The European Recall Index report includes analysis of recall data from the third quarter of 2023 for five key European sectors. In addition, to assist stakeholders in preparing for regulatory changes and evolving product safety risks their industry may encounter in 2024, the Index report also provides key analysis and guidance from our strategic partners at leading European law firms.

Third quarter product recall trends in review

The record-breaking number of recall events in Q3 2023 was driven by increases in pharmaceutical and medical device recalls, which rose 48.6% and 17.2%, respectively. The automotive and food and beverage industries saw recalls increase as well, though marginally at 1.4% and 1.1% respectively from the previous quarter. Consumer products was the only industry where recall activity decreased, falling 10.5% from the previous quarter. In the third quarter, regulators in the EU and UK focused on measures to support sustainability efforts, foster innovation across sectors, and make online shopping safer for consumers. Artificial intelligence (AI) and cybersecurity also remained a priority as regulators worked to balance technological advancement with product safety and data security. 

How Q3 2023 recalls compared to the previous quarter

  • The number of European automotive recalls increased 1.4%, from 214 in Q2 2023 to 217 in Q3. This marked just the third quarter in over ten years with more than 200 automotive recall events. Injuries were once again the leading cause, with 164 events, while passenger cars were the most recalled vehicle type, with 147 events. The UK issued the most recall events for the seventh consecutive quarter.
  • European food and beverage recalls increased just 1.1% from Q2 to Q3 2023. Non-bacterial contamination was the leading cause of recalls with 470 events, with aflatoxins and chlorpyrifos the most common contaminants of concern. Fruits and vegetables remained the product category with the most recalls with 192 events.
  • Pharmaceutical recalls increased 48.6%, from 74 events in Q2 2023 to 110 in Q3. This places pharmaceutical recalls on track to reach a three-year high for 2023. Safety risks were the leading cause of recalls with 22 events, which is down slightly from the 30 events recorded in Q2 2023.
  • There were 886 European medical device recalls in Q3 2023, an increase of 17.2% from the previous quarter. Software was the most common reason cited for medical device recalls, with 114 events. Germany issued the most recall notifications with 199.
  • The number of consumer electronics recall events fell by just over one third (34.5%) in Q3 2023, from 168 in Q2 to 110. The most common risk was electric shock, which was linked to 56 recalls as a standalone cause and 66 when combined with other factors. 
  • European toy recalls decreased 14.2% in Q3, from 120 in Q2 to 103 in Q3. While this marks a third consecutive quarter of decline, a significant uplift is expected in Q4 as we approach the festive period. Over the last 5 years, recall activity has increased 56% in the final quarter. Accounting for 18 events, Soft toys surpassed Plastic dolls as the leading product category in Q3.
  • There were 59 clothing recalls in Q3, a 49.6% decrease from the 117 events in Q2. However, last quarter was the only quarter since Q4 2017 to exceed 100 clothing recalls. The combination of injuries and strangulation was the most common reason for clothing recalls, cited in 35 events in Q3 2023.

Looking ahead in preparation for 2024

Across all industries, we are seeing an increasing number of regulations that build on each other or are modelled after existing laws. This trend is evident with extended producer responsibility rules, as well as proposed rules supporting the European Green Deal, the Farm to Fork strategy, and the Circular Economy Action Plan. Perhaps most notable of all is the varying approach to regulating AI, which may be regulated at the national level with the EU’s AI Act and with sector-specific guidance for industries like 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.

As European recall events continue to rise, and a more stringent (and interconnected) regulatory landscape continues to evolve, businesses face a complicated risk landscape with little margin for error. As we enter 2024, a strategic and well-planned approach to product safety and recalls will set businesses on the right foot.

The European Recall Index is published every quarter by Sedgwick’s brand protection experts. It is the only report that aggregates and tracks recall data across the UK and EU to help industry stakeholders navigate the regulatory environment, product recalls, and other in-market challenges.

To download your copy of the latest European Recall Index report, click here.

EU Health groups propose solutions to MDR and IVDR concerns

October 2, 2023

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Frustration with the EU Medical Devices Regulation (MDR) and In Vitro Diagnostics Regulation (IVDR) continues to mount among industry stakeholders over a lack of quick and economical regulatory approval processes. Since the inaction has resulted in some lifesaving products being pulled from the market, EU medical groups have begun to voice their own suggestions for how to rectify the issue.

Earlier this year, the European Health Commission provided an extension to May 2026 for companies to comply with the MDR and IVDR. However, industry stakeholders want the European Health Commission to do more to address their concerns with the regulatory framework.

Calls for structural reform

Along with 34 national associations, MedTech Europe, a European medical technology trade association, recently sent a letter to the European Commissioner for Health, Stella Kyriakides, calling for structural reform to both the MDR and IVDR. The groups hope that reforms will help ensure that medical technologies can reach healthcare systems across Europe in a timely manner.

In the letter, MedTech Europe and the other signatories called for the designation of a more efficient CE marking system to reduce administrative burdens. The groups have also called for the designation of an ‘innovation principle’ to connect emerging technologies more swiftly with patients and health systems through earlier dialogues with developers, and they’ve argued for the establishment of an accountable governance structure to oversee and manage the regulatory system and notified bodies.

Aligning with regulatory trends

The proposal to create an ‘innovation principle’ would align the MDR and IVDR more closely with current European Commission regulatory trends. Other pharmaceutical and medical device regulations that were introduced more recently than the MDR and IVDR by the Commission have sought to prioritise innovation and market access alongside product safety. For example, the European Clinical Trials Regulation (CTR) will create greater regulatory convergence and efficiency by streamlining the application process for clinical trial applications, allowing for companies to place a greater focus on innovation than on the administrative process.

Similarly, the European Commission’s recently proposed pharmaceutical regulation package also prioritises innovation and market access with measures to (1) provide incentives for companies that produce medicines that achieve public health objectives, (2) reduce the standard regulatory protection period, and (3) increase access to pharmaceuticals.

Meanwhile, another group of healthcare experts have published an academic article outlining recommendations on evaluating high-risk medical devices for children. Their recommendations also include the establishment of a task force on ‘orphan devices’, plus the designation of a clear definition for the term ‘orphan device’ itself (the name given to devices that treat rare health issues and are produced in small quantities). The group explains that resolving this issue would enable the taskforce and other groups to find ways to protect designated critical orphan devices.

Considering these calls for reform to the MDR and IVDR and the fact that Commissioner Kyriakides has admitted more changes to the regulations are likely needed, manufacturers should continue to take advantage of opportunities to engage with regulators and provide input on the reform process.

Ensuring eligibility and increased regulatory obligations

It is also critical for manufacturers to ensure they have completed the necessary administrative steps to be eligible for the MDR transition extension. Companies should also ensure they understand if they are eligible and what category of eligibility they might fall into per the Medical Device Directive.

In proposing the establishment of a new accountable governance structure to oversee regulatory agencies and notifying bodies, industry members should understand that this will likely lead to significantly increased regulatory obligations for manufacturers amid greater enforcement power for that entity.

Learn more > Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 7,000 of the most time-critical and sensitive product recalls in 100+ countries and 50+ languages, over 25 years. To find out more about our product recall and remediation solutions, visit our website here.

Service Target Performance Incentive Scheme (STPIS) claims: here today, gone tomorrow?

September 20, 2023

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In recent years, we have seen an increase in claims across Australia made by electricity distributors for financial loss resulting from third-party damage to their infrastructure. The most significant part of these losses commonly relates to a regulatory scheme known as the Service Target Performance Incentive Scheme (STPIS), administered by the Australian Energy Regulator (AER).

What is the STPIS?

The STPIS acts as a mechanism to incentivise electricity distributors in Australia to enhance their service reliability. The scheme establishes performance benchmarks that measure the frequency and duration of power outages experienced by customers. Distributors which outperform these benchmarks receive additional revenue under the scheme, while those that underperform face penalties, in accordance with a predetermined formula.

Benchmarking and Regulatory Control Periods (RCP)

A key aspect of the STPIS is the interrelationship between current and future performance.

The STPIS operates within Regulatory Control Periods (RCPs), which span five years each. If a distributor fails to meet its performance benchmarks during the current RCP, it faces penalties under the STPIS. However, the benchmarks for the subsequent RCP are based on the distributor’s actual performance during the previous RCP.

This means that a distributor which is penalised for having a high level of outages during the current RCP will have easier-to-achieve benchmarks in the next RCP. For example, say a distributor had a target of 100 minutes of outages per customer for its current RCP. It was on target to achieve the 100-minute benchmark, but damage caused by a third party results in it achieving 105 minutes per customer instead.

During the next RCP, its target would be set at 105 minutes/customer rather than 100. If it then achieved 102 minutes of outages/customer during the next RCP, it would receive bonus revenue under the STPIS (since 102 minutes is under the revised target of 105 minutes), whereas but for the third-party damage, it would have been penalised for being 2 minutes above its original target of 100 minutes.

STPIS claims

STPIS claims arise when a third party causes damage to infrastructure owned by a distributor, such as power lines or substations, causing an outage. The outage causes the distributor to perform worse relative to their STPIS benchmarks than it otherwise would have, resulting in a penalty (or reduced revenue) under the scheme.

However, the underperformance caused by the outage in the current RCP will also result in easier-to-achieve benchmarks in the next RCP, as explained above. Consequently, the distributor can expect to receive higher revenue in the next RCP as a result of these more attainable targets.

In our experience, a loss during the current RCP is generally identified in the STPIS claims made by distributors, however the benefit in future RCPs is almost never acknowledged. By not offsetting this future benefit against losses in the current RCP, the STPIS claims submitted by distributors are generally materially overstated.

Adjustment of claims

The STPIS is a complex scheme, and losses are calculated based on complex models which rely on a large number of inputs, some of which vary significantly from year-to-year. In addition to ensuring we take into account any future benefits to the distributor in our assessment of the loss, it is common to find other issues with the inputs used within the claim models. An example of a frequently issue relates to liability on these claims, which require scrutiny of the circumstances of the alleged incidents to identify whether other parties may bear some of the responsibility for the damage. This can result in appropriate adjustments being made in respect of liability.

In our experience, a proper review of STPIS claims by appropriate experts, including forensic accountants and liability adjusters with experience in these types of claims, can result in significant reductions to the claim by the time settlement is achieved.

Eye drops become latest OTC product impacted by recalls

March 28, 2023

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The healthcare industry is changing to accommodate more modern demands, particularly those of patients who choose to self-treat.

Over-the-counter (OTC) medications have risen in popularity recently, as patients increasingly seek more flexibility to take charge of their own health. For years, the U.S. Food and Drug Administration (FDA) has collaborated with pharmaceutical developers and producers to draft rules that would increase public access to OTC medications. These developments help all parties involved in the medicine supply chain, but they can also occasionally hurt patients.

Product safety and quality concerns

Eye drops are a common OTC drug used to treat a number of eye disorders including allergies, infections and dry eyes. Yet, the FDA has already recalled four eye drop products so far this year due to issues with product safety and quality. In February 2023, the Centers for Disease Control (CDC) announced it had identified 55 patients in 12 states who had been impacted by a rare strain of the drug-resistant Pseudomonas aeruginosa bacteria. These infections caused permanent vision loss resulting from a corneal infection, hospitalization and even one death.

These cases were due to an artificial tear product meant to hydrate dry eyes which result from conditions like aging, allergies, side effects of other medications, or other health conditions. The FDA recommended this recall due to the company’s current Good Manufacturing Practice (cGMP) violations, including lack of appropriate microbial testing, formulation issues, and a lack of proper controls concerning tamper-evident packaging. The FDA is already collaborating with the CDC and state and local health departments to investigate whether more people have been affected by issues with this manufacturer and/or other OTC eye drops.

Recall notices

Due to potential sterility issues that could result in significant eye infections, injuries or visual impairments, the FDA has now added two additional eye drop products to its recall list. These companies did not face civil penalties (in contrast to the previous recall) because there have been no reports of illnesses or injuries linked to the use of their products.

One recall was initiated because the lids on some of the bottles have developed fractures, which might allow bacteria, fungi or other microbes to contaminate the eye drops. The other recall was initiated because the product was found to be non-sterile, meaning it may contain harmful contaminants that could cause eye infections or damage.

Best practices for manufacturers

As we mentioned in our 2023 State of the Nation Recall Index report, regulatory agencies like the FDA are becoming more aggressive when it comes to recalling products that might endanger consumers. The FDA has issued several notices due to potential contamination, so manufacturers need to make sure their facilities are in compliance with all relevant health codes. Companies should closely monitor changes to their legal and compliance obligations to make sure the FDA and CDC don’t have any reason to scrutinize their products.

Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 5,000 of the most time-critical and sensitive product recalls in over 100 countries and 50 languages. To find out more about our experience with recall planning, simulations, and live event execution, visit sedgwick.com/brandprotection.

European product recalls increased in 2022, with heightened regulatory activity expected in 2023

March 17, 2023

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According to Sedgwick’s 2023 State of the Nation Recall Index report, product recalls in five key European sectors increased in 2022 for the second consecutive year. The 10,545 recall events in 2022 represent a 4.3% increase over 2021 numbers for the automotive, consumer product, food and beverage, pharmaceutical, and medical device industries.

Our latest State of the Nation report analyses UK and EU product recall data and trends for all of 2022. In addition to data analysis, the report also provides unrivalled insights and predictions from our brand protection experts on the key product safety trends and regulatory developments expected for the remainder 2023.

2022 product recall trends in review

While European product recalls increased 4.3% from 2021 to 2022, this is less than the 23.3% increase from 2020 to 2021, indicating that the rapid post-pandemic growth in recall activity may be slowing down. The increase in the number of recall events in 2022 was largely driven by the automotive sector (+31.7%), as well as the three constituent sectors classified as consumer products – toys (+43.4%), electronics (+7.7%), and clothing (+58.3%). Conversely, the food and beverage (-3.3%), pharmaceutical (-16.4%), and medical device (-4.6%) sectors all experienced a decline in recall events year-over-year in 2022.

How Q4 2022 recalls compared to the previous quarter

  • Automotive recalls increased in the fourth quarter, from 167 in Q3 2022 to 195. Injuries accounted for 157 of these events (or 80.5%), followed by ‘Fire’ and ‘Fire and injuries’ with 27 and five events respectively.
  • While food and beverage recalls increased 7.8% in Q4 from Q3 2022, the total number of recalls in the sector declined 3.3% from 2021 to 2022. ‘Contamination – other’ was the top concern listed for food and beverage recalls for the fourth quarter in a row.
  • Recalls in the pharmaceutical sector increased 73.3% in Q4 2022, rising from 60 in Q3 to 104 in Q4. Accounting for 42 events (40.4%) ‘Safety’ was the leading cause of pharmaceutical recalls. This was followed by ‘Failed specifications’ with 18 (17.3%), and ‘Mislabelling’ with 15 (14.4%)
  • The number of medical device recalls increased 14.6% from Q3 to Q4 2022, with 740 events. ‘Software issues’ were the most common reason for medical device recalls for the sixth consecutive quarter.
  • Electronic product recalls increased 25.8% in Q4 2022 to 78 events, rising from 62 in Q3. Lighting products were the most recalled category with 14 events (or 17.9%). This was followed by ‘Extension leads and cords’ with 10 (12.8%) and ‘Laser pointers’ with 5 (6.4%).
  • There were 217 toy recalls in Q4 2022, more than double (114.9%) the number in Q3, likely as a result of a higher demand for toys around the Christmas period. Plastic dolls were the most recalled toy in Q4, making them the most commonly recalled toy for the fourth consecutive year.
  • Similarly to toys, the number of clothing recalls increased by 114.3% in Q4 2022, rising from 35 events in Q3 to 75 in Q4. Children’s apparel was the most commonly recalled product category, accounting for 60.0% of all clothing recalls in Q4 2022.

What lies ahead in 2023

Regulatory bodies spent 2022 laying the groundwork for new rules in 2023, with proposals impacting everything from labelling and ecodesign to carbon emissions and product liability. As these proposals work through the legislative process in 2023, manufacturers may find themselves responsible for their products throughout the entire product lifecycle. UK regulators are also finalising the separation from the EU and are expected to make determinations in 2023 about whether to retain or replace hold-over regulations.

Furthermore, European regulators are continuing to focus on moving forward from the COVID-19 pandemic, ensuring that lessons learned – not only about healthcare but also about supply chain resiliency and vulnerability – inform laws going forward. 2023 will also continue to bring new economic threats with unstable geopolitics impacting consumer prices and commodities.

In the face of continued regulatory and political change, it is imperative that companies plan for risks across a variety of areas and to engage third party experts to prepare their brand for whatever challenges may arise.

Learn more > Discover the full picture on European product recall data, trends and predications, along with unrivalled insights and analysis from some of our strategic partners in the 2023 European State of the Nation Recall Index report – available for download here.

Property disrepair claims – An awakening

March 7, 2023

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The UK media have extensively reported on the issue of mould caused by property disrepair following the death of Awaab Ishak. The Coroner issued a Regulation 28: report to prevent further deaths to The Department for Levelling Up, Housing and Communities who have published their response.

Rising awareness

The Housing Ombudsman sent an open letter to social landlords in November 2022 about complaints relating to damp and mould. The letter requested that they adopt a proactive zero-tolerance approach as recommended in the Spotlight Report from October 2021. Landlords were asked to assess themselves against 26 recommendations, engage with residents during the process and publish the results. The letter also warned against the use of inappropriate language, such as blaming the resident’s lifestyle.

In July 2020, the Draft Building Safety Bill was presented to Parliament. The bill included provision for the removal of the ‘democratic filter’ before they could access redress via the Housing Ombudsman. During 2019-20 only 6.9% of cases entering the Ombudsman’s formal remit had been referred by a designated person. On 1 October 2022, changes to The Housing Ombudsman Scheme took effect and the ‘democratic filter’ was removed. This ensured that social housing residents had unrestricted access to an Ombudsman.

Following the change, the Housing Ombudsmen using their powers under Section 49 are investigating to establish if there’s evidence of systemic failings. The Housing Ombudsman Special Report on Birmingham City Council published in January 2023 found a maladministration rate of 96%. Further investigations with other social landlords are ongoing with others expected.

With the focus of claimant solicitors now turning to other revenue streams following the 2021 whiplash reforms and COVID-19 business interruption claims, housing disrepair claims are now in the crosshairs of many of these firms as an alternative.

My colleague, Richard Lumby, technical and audit manager commented on this matter, explaining that “The appetite of any claimant law firm to enter the market or remain there will largely be driven by the desire to maximise costs. With the proposed shift to fixed recoverable costs in the next two years, one must assume this will dampen interest amongst proposed entrants and lead to a more streamlined approach amongst existing firms as we saw when the principle was applied to personal injury claims back in 2013.”

Another colleague, Victoria Full, technical and audit manager shared that “Up until these changes are implemented, we expect that track allocation and costs will remain a contentious issue as highlighted by the issues in the County Court decision in Jalili v Bury Council (17 June 2021). Jalili-v-Bury-Council-Manchester-CC-Judgment-20210617-V-Final.pdf (civillitigationbrief.com)

According to The English Housing Survey (2021 to 2022) published, 19% are within the private sector with a further 17% in the social rented sector. The Headline Report noted various interesting points including that in the private sector 23% of homes were deemed “non-decent” compared with 10% in the social sector and problems with damp were most prevalent in the private rented sector with 11% of dwellings having reported a problem in 2021. It’s considered that the private rented sector will be the main source for these types of claims.

The housing quality and condition report provides a range of useful data, including the types of property where disrepair is more likely to be a problem and also provides a breakdown by region.

Dan Peck, Sedgwick’s regional director for complex liability commented: “It’s not just damp and mould that can cause an issue. Floors, stairways and banisters that are poorly maintained can cause falls which could lead to far more than a housing repair claim as significant injury could occur. With the ongoing cost of living crisis, landlords could be left with a double-edged sword. There will be less money to fund the cost of the necessary repairs to keep the property fit for habitation and the tenants unable to fund the costs of the required rental increase to meet the costs of repair.”

In an effort to improve the UK’s housing stock, the Government passed The Homes (Fitness for Human Habitation) Act 2018 that came into force on the 20th of March 2019. The act amends the Landlord and Tenant Act 1985 sections 8 to 10 and inserts a new s.9A, s.9B and s.9C.

The act applies to all new tenancies of a term less than seven years (including new periodic tenancies) granted on or after the commencement date as well as to all tenancies that began as a fixed term before the commencement date but become a periodic tenancy after the commencement date.

The Forum of Insurance Lawyers’ disease sector focus team says that liability claims for injury generally involve sums of less than £5,000, although there are occasionally larger amounts. What often happens is that a claim is made for financial recompense off the back of housing disrepair claims, then if the surveyor appointed finds mould, it could also give rise to financial compensation for associated respiratory injury also.

We’ve already seen a handful of cases and it’s considered that this may become a prevalent issue for liability insurers, particularly because of social conditions. However, the low compensation levels involved make the cases less attractive to claimant firms.

Regulatory framework

Prior to the 2018 Act landlords were required to keep properties “in repair”, as opposed to being “fit for habitation”. If a property has a defect that isn’t classed as ‘disrepair’ because the property has never been in a better condition (such as inadequate ventilation that leads to excessive condensation), the landlord was not obliged to improve its condition. The 2018 Act sought to close this loophole.

As set out in s9A(4), this can’t be avoided or contracted out of by the landlord, nor can any contractual penalty be levied on the tenant for relying on the covenant.

The act supplements s.11 LTA 1985 and requires that the property let remains fit for human habitation. The amended s.10 provides a definition of fitness of ‘for human habitation.’

We anticipate that this will — in the event of a claim — take some interpretation on the facts of the case but will be compared to the current list of 29 HHSRS hazards. Regard will need to be given as to whether a property is unfit, and also whether there’s a risk of harm to the health or safety of the occupiers.

We are reasonably confident that the doctrine relating to liability for unfitness as set out in O’Brien v Robinson [1973] will still apply; being as there are no express provisions in the Act on notice to the landlord, which is the case in S11 of the Landlord and Tenant Act.

In saying the above, for any unfitness arising from the landlord’s retained parts (common parts or exterior of a building of which the dwelling is part), the landlord will be deemed to be on notice as soon as the unfitness arises, and liable after a reasonable time to remedy the defects – Edwards v Kumarasamy [2016] refers.

Additionally, there are exceptions to the landlord’s duties under the act, including:

  • The landlord is not responsible for unfitness caused by the tenant’s failure to behave in a tenant-like manner, or that results from the tenant’s breach of covenant
  • The landlord isn’t obligated to rebuild or reinstate the dwelling in the case of destruction or damage by fire, storm, flood or other inevitable accident
  • The landlord isn’t obligated to maintain or repair anything the tenant is entitled to remove from the dwelling
  • The landlord is not obligated to carry out works or repairs which, if carried out, would put the landlord in breach of any obligation imposed by any enactment (whenever passed or made) – this would include things like breaching planning permission, or listed building consent, or conservation area requirements
  •  Where the needed works require the consent of a third party (e.g., a superior landlord or freeholder, a neighbouring leaseholder or owner, or a council) and the landlord has made reasonable endeavours to get that consent, but it has not been given

The Pre-Action Protocol for Housing Disrepair Cases will apply for cases of disrepair including personal injury to the occupants.

Conclusions

It’s considered the spotlight on these cases due to the recent media interest will have a far-reaching impact on the conditions of housing stocks especially in light of the recent open letters to all social housing landlords and can only be good for a tenant in dealing with bad landlords. Time will tell as to how this impacts claims for injury caused by disrepair, in particular with the removal of the reliance that the property was in poor condition at the start of the tenancy. It’s reassuring that the notice doctrine remains and that other defences are still available.

The main reason for optimism for liability insurers is the realisation that if such appalling cases such as Awaab Ishak’s start happening more often, then the subject will quickly rise to the top of the social agenda and landlords will receive much greater scrutiny.

Special thanks to Victoria Full, technical and audit manager; Dan Peck, regional director for complex liability; and Richard Lumby, technical and audit manager for their valuable contributions to this blog.