I came across a very similar situation about 18 months ago, when my CEO signed a deal for us to sell a braiding machine, (for braiding electrical wire harnesses/looms), re-badged with our logo.
We were supplied a machine to demo at a trade show in the USA and had it delivered to site first so we could train the sales team how to operate it at the show.
When it was first powered up, I was horrified at the lack of guarding and the speed that the carriers/bobbins were running, so I immediately raised this with my CEO. My main concern was that it did not comply with "BS EN ISO 13857 : Safety of machinery. Safety distances to prevent hazard zones being reached by upper and lower limbs", as I could put my hand and arm straight into the processing area !
Raised this with the manufacturer, who had been making and selling these machines for over 30 years, (self certified CE marked). Their response was that it was classed as a "textile machine" and therefore exempt from BS EN ISO 13857, because if you were to guard it, you would not be able to run it. They advised me that the textile industry had its own standards that it worked to.
They claimed to work to BS EN ISO 11111-4, which is a C standard for textile machines and that by complying with this it gave automatic presumption of conformity with the EHSR's.
The answer they gave was plausible, however after studying the standard, it specified the requirement for an overload device between the motor and the carrier gear which would disengage the drive from the motor if excessive force was occurred. When we enquired at what force this would be triggered, we were told that it was adjustable in the controller, but that it was always set to the max force, otherwise the machine would be continually tripping out and have to be re-thread.
Over the next few weeks the manufacturer of the kit maintained that it was safe and complied with ISO 11111, but we continued to ask for evidence of this. They even took me into a factory running several hundred of their machines, to prove they could not be guarded and that the overload had to be set high, (probably the worst factory I have been in for safety in the last 20 years, but that's another story).
In the final meeting with the manufacturer, I asked the owner of the company that if he maintained the machine meet the relevant safety standards, would he demonstrate the safety overload by stopping it with his hand. He declined this, so instead, I tested it with a piece of 2x2 timber.
The result was as I expected, the piece of timber was smashed to pieces and the machine continued to operate, minus a few carriers !
On seeing this the CEO said "OK I've seen enough, we will not be selling these", much to my relief.