Comment sought on proposed national consumer law

Federal Consumer Affairs Minister Chris Bowen, has announced the fast tracking of new laws to protect Australian consumers. Mr Bowen said the Federal Parliament will consider legislation during 2009 to protect consumers from unfair contract terms and to provide new enforcement powers for the Australian Competition and Consumer Commission (ACCC).

Currently, Victoria is the only jurisdiction in Australia with specific legislation protecting consumers against unfair terms in consumer contracts. Under the Fair Trading Act 1999 (Vic), unfair terms are void and unenforceable.

Mr Bowen said the move will "extend consumer protection for unfair contract terms like that which is currently available to consumers in Victoria and the United Kingdom and the rest of the European Union".

Background

In 2007-2008 the Productivity Commission reviewed Australia's consumer policy framework. The Commission was asked to report on ways to improve the coordination of consumer policy development, the harmonisation of consumer laws and their administration across jurisdictions in Australia, and the removal of regulatory duplication and inconsistency.

The Commission received 262 written submissions from national, state and territory government bodies, businesses, consumer representatives and the public, and conducted two rounds of public hearings in Sydney, Melbourne and Canberra. The Commission concluded that "while Australia's consumer policy framework has considerable strengths, parts of it require an overhaul".

Proposed changes

In its final report to the Federal Government (tabled and published in Parliament on 8 May 2008), the Productivity Commission specifically recommended that:

  • Australian governments should implement a new national consumer law, based on the consumer provisions in the Trade Practices Act 1974 (Cth) (TPA). The new law could be augmented in areas where the TPA does not provide adequate protection; in particular generic issues and incorporate certain provisions from the state and territory Fair Trading Acts, where it is generally agreed that the TPA is not adequate;
  • The new law should apply to all consumer transactions, including financial services, with the Australian Securities and Investments Commission (ASIC) retaining its role as the primary regulator for financial services;
  • Unnecessary or divergent sector-specific laws should be identified with a view to repealing or harmonising them across jurisdictions where possible;
  • A provision should be incorporated into the new law that addresses unfair contract terms. The Commission's preferred approach was that the provision would relate only to standard form contracts, exclude up-front prices from consideration and require all circumstances of the contract to be considered. A term would be unfair when it causes significant imbalance in the parties' rights and obligations and would, if exercised, results in material detriment to consumers;
  • Responsibility for enforcing the consumer product safety provisions of the new law in all jurisdictions should be transferred to the Federal Government and undertaken by the ACCC;
    The remainder of the new law should be jointly enforced by the ACCC and state and territory consumer regulators. Individual States and Territories should have the option of referring their enforcement powers for all of the new law to the Federal Government with enforcement undertaken by the ACCC;
  • New enforcement powers and remedies for the ACCC, including civil pecuniary penalties, disqualification orders, substantiation notices, infringement notices, public warning ('naming and shaming') powers and redress for non-parties;
  • The new enforcement arrangements should be independently reviewed, with explicit consideration of the costs and benefits given to the case of moving towards a single national regulator model. A single national consumer regulator should be considered if the review finds evidence of differing enforcement practices or divergence of jurisdictional regulation.

COAG's reform process

On 26 March 2008, the Council of Australian Governments (COAG) agreed that the Business Regulation and Competition Working Group (BRCWG), in consultation with the Ministerial Council on Consumer Affairs (MCCA), would develop an enhanced consumer policy framework, including legislative and regulatory structures, drawing on the final report of the Productivity Commission.

On 23 May 2008, the MCCA agreed to develop detailed policy proposals for implementing the Commission's recommendations and developed a series of detailed reform proposals designed to respond to the Commission's final report, which it agreed on 15 August 2008, along with an indicative implementation plan. The MCCA then submitted these proposals to the BRCWG, prior to the BRCWG recommending these to COAG for agreement on 2 October 2008.

On 2 October 2008 COAG, at its 23rd meeting in Perth, agreed to a new consumer policy framework, comprising a single national consumer law and streamlined enforcement arrangements.

Implementation timeline

The timeline for the implementation of these reforms is as follows:

  • By 30 June 2009: finalisation of the Inter-Governmental Agreement (covering the Australian Consumer Law and including product safety);
  • By 30 June 2010: finalisation and agreement of the text of the legislation for the Australian Consumer Law, including the product safety reforms; and
  • By 31 December 2010: the Federal Parliament is to have passed legislation for the Australian Consumer Law (including product safety) and amended the TPA; the Parliaments of the States and Territories are to have passed application Acts to apply the Australian Consumer Law (including product safety) in their own jurisdictions; and Australian Consumer Law is to have commenced in all Australian jurisdictions.

Public comment sought

The Standing Committee of Officials of Consumer Affairs (SCOCA), have produced a paper entitled: An Australian Consumer Law: Fair Markets - Confident consumers, which provides information on COAG's agreed consumer reforms and seeks public and stakeholder comments on further suggestions for reform, particularly in relation to the likely compliance costs, impacts on competition and any other costs or benefits.

This information will then be considered in the preparation of a Regulation Impact Statement and any other necessary regulatory documents. Responses are requested by 5pm on Tuesday, 17 March 2009.

3 March, 2009

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