On 1 December 2013 the Scrap Metal Dealers Act 2013 (the “Act”) came into force in England and Wales. The Act aims to combat the recent increase in metal theft which is being spurred on partly by rising commodity costs. The Act requires that scrap metal dealers (“dealers”) have a licence from their local authority and maintain a record of transactions. Cash payment for scrap metal is prohibited. Failure to comply is a criminal offence subject to a fine of any amount a court decides is appropriate.
1. Who is affected?
The Act applies to a person or company carrying on “a business which consists wholly or partly in buying or selling scrap metal, whether or not the metal is sold in the form in which it was bought”.
It would be a question of fact for a court to decide whether the buying or selling of scrap metal forms all or part of a person’s business, or such a minimal part of their overall business dealings that the definition of “scrap metal dealer” within the Act is not made out. In deciding this, a court might consider for instance the proportion of the business related to scrap metal in terms of value or volume.
However, Home Office Guidance states that the Act, in replacing the Scrap Metal Dealers Act 1964 and the Vehicles (Crime) Act 2001, was not intended to extend the scope of persons needing to register. Therefore it is unlikely that the Act would apply to companies producing ferrous and non-ferrous metals simply because they purchase processed scrap metal as a raw material to use in their manufacturing process. Likewise, the Act is not intended to apply to manufacturers if they sell scrap metal only as a by-product of manufacturing articles or as surplus material not required for manufacturing articles.
2. What are the requirements?
Scrap dealers must:
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Have a licence (as from 1 December 2013). A licence lasts for three years and is either site-specific or mobile. Site managers will be named in site-specific licences. The local authority can only grant a licence to a “suitable person”. Suitability will be assessed having regard to any relevant previous convictions and/or enforcement actions of the applicant or any site manager, and whether the applicant has demonstrated that adequate procedures are in place to comply with the Act.
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Notify the local authority of any changes materially affecting the accuracy of the information that was provided when applying for the licence, such as a change of name (generally within 28 days of the change).
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Display a copy of their licence at each site identified in the licence in a prominent place in an area accessible by the public and on any vehicle being used in the course of the dealer’s business.
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Verify the name and address of a seller of scrap metal at the point of sale, by reference to information from a reliable source.
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Not pay for scrap metal in cash. A dealer may only pay/accept payment by cheque or by electronic transfer of funds (e.g. by debit or credit card).
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Keep records of scrap metal bought and sold. Dealers must record a description of the metal, when it was received/disposed of, the full name and address of the other party (and a copy of any document used to verify this), and a copy of the cheque or particulars of the electronic transfer if receiving or a record of the amount of consideration if disposing.
The Environment Agency (in England) and the Natural Resources Body for Wales will maintain public registers recording:
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the name of the authority that issued the licence;
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the name and trading name of the licensee;
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the address of any site identified in the licence; and
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the type of licence and the date on which the licence is due to expire.
3. What are the penalties for non-compliance?
The following are criminal offences, each subject to a fine:
From 1 October 2013
From 1 December 2013:
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Buying or selling scrap metal without a licence (any amount the court considers appropriate).
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Failing to comply with notification requirements or failing to display licence (up to £1,000).
Additionally, if an offence committed by a legal entity is proved to have been committed with the consent or connivance, or attributable to any neglect, of a director/manager/secretary/officer, that individual also commits an offence and is liable to the same penalty.
