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This is a lower cost option than vehicle specific towbar wiring, however it does have some compromises as a result.
Universal towbar wiring does provide all the lighting functions that are needed to keep you legal while towing your trailer or caravan.
However it doesn't provide the additional benefits provided by vehicle specific towbar wiring.
For example with universal towbar wiring your parking sensors and fog light on the car would not be disabled while towing as they would when using vehicle specific wiring.
Perhaps most importantly, if your car has Trailer Stability Control, which is an extension of the cars normal Stability Control, it may not be activated by universal towbar wiring.
For this reason this type of wiring should not be fitted to newer cars which have built in safety featurs that will only be activated using Vehicle Specific Wiring. It simply makes no sense to save a few pounds with yor towbar wiring and compromise your safety while towing.
In order to protect the warranty on a new vehicle, the manufacturer and their dealership network would insist that any towbar wiring must be equivilent to that supplied by themselves. Universal aftermarket wiring would not meet their requirement, so to protect the warranty on a new car, strictly speaking you do have to have Vehicle Specific Towbar Wiring installed.
However, to clarify, the warranty can only be affected on those parts of the car directly affected by the towbar wiring, so for example if you have aftermarket towbar wiring installed, and your gearbox fails, the warranty on the gearbox would not be affected.
In reality, so long as towbar wiring in professionally installed, it is very very rare to get a problem arising from aftermarket universal towbar wiring.
Universal towbar wiring is installed (where necessary) using an interface relay which protects your cars on board systems from being overloaded by the trailer or caravan wiring. Modern interface relays have built in electronic resettable fuses.
This system essentially draws the power directly from the vehicles battery to provide power to the lights on your trailer or caravan, and only uses the vehicles lighting circuit and to provide a 'signal' to the interface relay. This means that only a very small additional load is placed on your vehicle.