What are the risks in being a director of a company that holds a transport operator's licence?

As a company director, you will probably already be familiar with the concept of personal liability for corporate health and safety offences, breaches of directors’ financial duties, and environmental offences.

You may be less familiar with the personal liability that can attach to a director of a company that holds a licence to operate goods vehicles or buses.

In the UK, the operation of trucks and buses is regulated by the Office of the Traffic Commissioner. The Traffic Commissioner has wide-ranging powers not just to revoke a company’s operator’s licence, but also to disqualify individual directors from being involved in future with a company that holds an operator’s licence.

In holding an operator’s licence, every director of a company has given a legal undertaking to the regulator that they will ensure that the conditions on the company’s licence are complied with. Failure to comply with these conditions is a criminal offence and will very often result in regulatory action being taken against you by the Traffic Commissioner.

Is this not just the responsibility of our transport department?

Unfortunately not. Responsibility ultimately rests with a company's directors. This is made clear in the Senior Traffic Commissioner’s Statutory Guidance Document No. 6:

“Persons who control an entity which operates goods vehicles or public service vehicles must have sufficient knowledge to exercise proper oversight. In the United Kingdom directors have the same legal duties, responsibilities, and potential liabilities regardless of whether they are full-time or non-executive directors. Traffic commissioners are therefore entitled to assume that directors are all equally responsible for the management of a company and therefore equally culpable for any non-compliance.”

The same responsibilities would apply to partners of a traditional partnership or LLP, and to sole traders.

There are many reasons a company and its directors call fall foul of the transport regulator. Some of the more common reasons include:

• Company vehicles being unroadworthy or poorly maintained;
• Drivers not taking enough driving or rest breaks or driving whilst fatigued;
• Drivers falsifying their tachograph records;
• Insecurely loaded vehicles;
• Company vehicles being involved in bridge strikes;
• Failing to have systems in place to “continuously and effectively manage transport operations”

These issues may come to light during a roadside stop or a routine compliance audit by the Driver and Vehicle Standards Agency (DVSA). They can also arise in the course of a company’s application to the Office of the Traffic Commissioner for a fleet increase. 

Remember: when a company asks for extra vehicles, it will face extra scrutiny from the regulator. For this reason, many operators choose to seek advice before any application for a significant fleet increase.

What does regulatory action look like?

If compliance failings are found, a company can expect to be summonsed to a Traffic Commissioner’s Public Inquiry.

In 2021/22 alone there were 920 such Public Inquiries

You can read more about regulatory proceedings before the Traffic Commissioner in our previous article.

Minimising your risk

In our experience, board-level directors may sometimes have limited involvement in matters of day-to-day fleet management and transport compliance. This is most often the case if transport is not the main part of an operator's business.

This lack of familiarity can expose both directors and the company to hidden risk. Fortunately, there are simple steps that can be taken to address this exposure. These include:

1. Familiarising yourself with the transport regulatory regime in the UK
2. Introducing transport compliance reporting as a regular item at board meetings, including KPI and Operator Compliance Risk Score reporting
3. Ensuring as many directors as possible have attend an accredited Operator Licence Awareness Training Course (OLAT)
4. Having robust procedures in place to identify, report and investigate transport and road safety incidents
5. Commissioning regular independent compliance audits from reputable trade organisations such as Logistics UK to “stress test” your transport operations and identify areas of risk
6. Establishing a trusted relationship with legal advisors who specialise in transport law and regulation
7. Having your compliance policies and procedures professionally reviewed to ensure they are fit for purpose and adequately protect the company, its directors and staff

We will always advise directors who may have concerns to take pre-emptive legal advice to identify and eradicate transport risk "before the event".