Productivity commission Delivers Enforcement & Reform report and Australian Consumer Law Review Recommends Significant Changes

19 April 2017

Australian Consumer Law Review recommends significant changes

Consumer Affairs Australia New Zealand (CAANZ) has today published its final report on its review of the Australian Consumer Law (ACL Review).

The purpose of the ACL Review was to assess the effectiveness of the ACL (including its administration and enforcement) in establishing and making accessible a common set of consumer protection rights and obligations.

The ACL Review makes a significant number of proposals for reform which would, if implemented, have a potentially large impact on retail new motor vehicle dealers. They include:

  • Amending the consumer guarantees to specify that where a good fails to meet a guarantee within a short, specified period of time, a consumer be entitled to a refund or replacement without needing to prove a ‘major failure’ (for example, similar legislation in the United Kingdom specifies a 30 day refund entitlement where goods fail to meet certain standards);
  • Clarifying that multiple minor failures can now accumulate to amount to a major failure (whether or not those minor failures relate to the same or different issues);
  • Imposing additional requirements relating to extended warranties – including additional disclosure requirements such as a comparison to ACL rights and a ten day cooling-off period (which becomes an unlimited cooling off period if the disclosure obligations are not met);
  • Adding additional guidance for what ‘reasonable durability’ and ‘unsafe’ means in the context of consumer guarantees;
  • Expanding consumer guarantees so that they apply to all online auction sales;
  • Requiring any additional fees and charges to be included in the headline price for online sales;
  • Reducing the evidentiary burden on consumers to prove claims for breaches of the consumer guarantees;
    Increasing maximum financial penalties for breaches of the ACL; and
  • Extending the ACL prohibitions on unconscionable conduct to apply to publicly listed companies.

According to the ACL Review Report, its proposals outline a reform package for the consumer affairs ministers of the Commonwealth, States and Territories to consider and implement. Consumer affairs ministers will meet in late 2017 to decide on what proposed reforms are recommended to the Council of Australian Governments Legislative and Governance Forum on Consumer Affairs (CAF). Once CAF has then agreed to the recommended reforms, they will be put to Parliament as a reform package for implementation. No estimated time frame has been given for this to occur.

The full report is available here.

Productivity Commission delivers enforcement & reform report as part of Australian Consumer Law review

On 12 April 2017, the Productivity Commission released a report to the Federal Government which evaluates the enforcement and administration of the Australian Consumer Law (ACL), and the role regulators play in making the law accessible and effective for consumers. In its report, the Productivity Commission makes specific recommendations about reform which may impact upon motor vehicle dealers.

In particular, the Commission recommends that Government consider expanding the powers of regulators to compel businesses (including motor vehicle dealers) to participate in alternative dispute resolution, such as mediation (without the need for legal proceedings to be on foot). The ability to actually compel (not just encourage) businesses to participate in alternative dispute resolution processes, without there being a legal proceeding on foot, would represent a significant shift from the current regulatory and enforcement environment.

Among other issues cited in its report, the Productivity Commission considered that:

  • Maximum financial penalties available under the ACL are too small;
  • Government should consider expanding all ACL regulators’ powers to issue infringement notices to deal with range of minor offences in a cost-effective manner;
  • Government should consider implementing a public register of consumer complaints (subject to appropriate vetting);
  • Government should consider streamlining the differences in administration and enforcement of the Australian Consumer Law between the various State jurisdictions. A specific example of an issue in this area was the different State jurisdictional limits, which prevented consumers in certain States from commencing low cost legal proceedings in relation to motor vehicles; and
  • There should be additional Government funding for consumer advocacy groups.

In preparing its report, the Productivity Commission considered submissions from a range of consumer organisations, industry participants and stakeholders and some State law societies. The submissions included calls for industry specific retail ombudsmen to assist consumers to resolve disputes under the ACL. While the Productivity Commission has not made any recommendation for the appointment of an industry specific ombudsman for the new motor vehicle retail industry, it has recommended that the Government consider expanding the powers of the ACL regulators where there is no industry specific ombudsman (such as in the retail new motor vehicle industry).

The Productivity Commission’s report is part of the broader review of the Australian Consumer Law which we have reported on above.

You can read the Productivity Commission’s full report here.

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