Summary and Recommendations
Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010
This bill is the second in a suite of trade practices
reforms. It renames the Trade Practices Act 1974 as the Competition
and Consumer Act 2010. While transferring many protections from the
existing act, it changes the drafting to conform to modern plain English. It
also replaces a variety of federal, state and territory legislation with
uniform national law. In addition, the bill introduces specific protections
such as consumer guarantees and addresses some undesirable practices of
unsolicited sellers. Finally, the bill introduces new remedies and enforcement
mechanisms for regulators and consumers.
The Committee believes the bill represents a substantial
achievement which will bring real benefits to consumers.
Recommendation 1
The Committee recommends that the Senate pass the bill,
preferably adopting the other recommendations in the report.
The Committee notes the overwhelming support for uniformity of
consumer protection legislation. The greater clarity this brings could be
enhanced if the occasional inconsistencies in the definition of 'consumer' in
the bill could be removed. The Committee believes that the Government should
aim to arrive at a single definition of 'consumer' throughout the provisions of
the ACL in future consultations and amendments to the legislation.
The Committee heard a number of suggestions as to how
'consumer' should be defined, but on balance did not find any of the alternatives
better than the main definition used in the bill, which regards 'consumer
goods' as those 'of a kind ordinarily acquired for personal, domestic or
household use or consumption'.
The bill will help consumers avoid paying for 'additional'
warranties that are really only duplicating their legal rights. This will be
more effective if consumers can readily comprehend the benefits they would
receive from buying an additional warranty.
Recommendation 2
The Committee recommends that the Minister look at requiring
plain English explanations be provided to consumers of the additional benefits,
or otherwise, of any extended warranty beyond existing statutory rights.
A theme that emerges at a few places in the report is that
the new legislation will need to be accompanied by education of consumers to
enable its full benefits to be realised.
Recommendation 3
The Committee notes the low rate of Australian consumers'
awareness, compared with that of New Zealand consumers, of their statutory
rights when purchasing goods and services, particularly in relation to
warranties. The Committee recommends the Government introduce a programme to
educate Australian consumers about their statutory rights in relation to
express warranties and other consumer guarantees. The programme should
particularly aim to educate consumers about the guarantee that goods must be of
"acceptable quality", which may offer protection above that included
in manufacturers or extended warranty contracts.
Recommendation 4
ACCC and consumer regulators should issue national guidance
in relation to the new consumer guarantees to ensure regulators, consumers and
businesses have a consistent understanding of their new rights and
responsibilities.
The bill envisages a distinction between 'minor' and 'major'
breaches of consumer guarantees. This concerned some witnesses.
Recommendation 5
The Committee recommends that an appropriate agency monitor
and, as soon as practicable after 1 July 2013, provide a comprehensive report
on:
(a)
the application of the distinction in Part 5-4 of the bill
between major and minor based on consumer behaviour (with a view to ascertain
whether improved definitions are required or amendments are warranted); and
(b)
consumers' behavioural awareness of consumer guarantees and use of
remedial relief.
The Committee welcomes that the bill will extend consumer
protection by requiring that services be 'fit for purpose'. The Committee
believes exemptions from these provisions should be strictly limited. The
exemption of utilities industries in cases such as unforeseeable weather events
can be justified, especially as these industries are also subject to specific,
additional regulation. The Committee was not, however, convinced by the
argument of architects and engineers for their services to be exempted
(although they should not be held responsible if their designs are poorly
realised by builders).
Another attractive feature of the bill is that it gives
consumers more protection in situations of 'unsolicited selling', such as
door-to-door sales, where they may be vulnerable to high-pressure sales
techniques. The Committee supports the bill's restricting these activities to 9
am to 6 pm on weekdays and 9 am to 5 pm on Saturdays. It considers the field
sales industry's fears of higher product prices and industry unemployment are
an insufficient counterargument to the householders' interests in relation to
safety and freedom from nuisance.
The Committee believes these provisions could be
strengthened to avoid sellers trying to get around them.
Recommendation 6
The Committee recommends that the bill defines an 'unsolicited
consumer agreement' as to include circumstances in which consumers are
contacted (and contact dealers) through indirect means. This should include
circumstances:
- where a consumer is contacted in relation to the supply of goods
or services after providing his or her name or contact details to a person, and
the predominant purpose for providing those details was not to supply those
goods or services; and
- where a consumer contacts a dealer in response to a 'missed
call'.
Recommendation 7
The Committee recommends that the Minister review the $100
exemption limit after consultation with direct sellers, other direct marketers
and other interested parties.
The bill also introduces a nationally consistent scheme for
product safety reporting. This information will be transmitted to the public
through a new website.
Some submitters, however, were concerned that the requirement
to report incidents involving death, serious injury or illness 'associated
with' a product rather than 'caused by' the product could be casting the net
too widely. In the case of motor vehicles it could also duplicate existing
reporting obligations. The Committee is sympathetic to the need to balance
protection of consumers and avoidance of overwhelming both suppliers and
regulators with unproductive paperwork, but is also aware that making
exceptions to legislation causes complexity and ambiguity. Furthermore, replacing
'associated with' by 'caused by', would probably raise more problems by putting
an onus on the reporter to verify or investigate the incident before reporting.
Recommendation 8
The Committee recommends that the provisions of the legislation
relating to product safety be reviewed within three years of implementation,
particularly with regard to the costs of compliance versus the benefits
obtained, the integrity of confidentiality of reports and any requirement to
review definitions of product safety and risk in mandatory reporting.
The bill has been criticised
for sometimes reversing the onus of proof. The Committee believes, however,
that this has only been done in instances where it is justified.
Finally, committee inquiry
processes have unearthed some apparent drafting errors which the Committee
suggests be investigated.
Recommendation 9
The Committee notes the claim of drafting errors. The
Committee does not believe that these issues are of sufficient magnitude to
delay passage of the bill. Notwithstanding this, the Committee recommends that
the Minister seek further advice and rectifies any drafting errors where
warranted.
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