Keynote Address: ICPHSO Asia-Pacific Symposium

Speakers: 
Mr Rod Sims, Chairman
Conference: 
International Consumer Product Health & Safety Organisation Symposium, Gold Coast
9 October 2013

ACCC Chairman Rod Sims delivers the keynote address to the International Consumer Product Health & Safety Organisation Asia-Pacific Symposium. Mr Sims names product safety as one of the ACCC’s highest priorities and calls on retailers to step up their compliance. The Chairman discussess product safety reforms in Australia and explains that international co-operation and collaboration on product safety is essential in an increasing global marketplace.

 

 

Transcript: 

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Acknowledgments

Thank you and a special welcome to our international guests. The ACCC is delighted to join with the International Consumer Product Health & Safety Organisation to host this symposium.

I would like to acknowledge and thank ICPHSO’s past President Joan Mattson and ICPHSO Executive Director, Ross Koeser, for their support for an Australian conference.

I am very pleased to see the ACCC co-hosting an international conference of this type and I am conscious that there was some risk to ICPHSO, not to mention the work involved, in undertaking an event such as this. Your willingness to venture into new areas has certainly paid off with this conference exceeding our attendance expectations with the majority of attendees to this conference attending an ICPHSO conference for the first time.

I would also like to offer my congratulations to Ross and to ICPHSO on celebrating 20 years of operation this year. I understand that ICPHSO relies substantially on volunteer effort and that Ross has provided a leadership role throughout the development of the organisation, initially in the United States, through to it becoming the international and highly valued organisation it is today. Congratulations on this remarkable achievement.

Joan Mattson has led the organising Committee for this joint conference from the ICPHSO side. To Joan I say thank you. Anyone who has had anything to do with organising a conference will know what a lot of work it is.

You have not only undertaken this task with us, but have done so as a volunteer and from a long distance – meaning that you have had many early morning telephone calls and you have also been emailing late into the evening I understand. That is a tremendous effort and again I say thank you very much.

ICPHSO is renowned for bringing people together from a range of backgrounds to talk about consumer safety issues. This event, which is the first of its kind in Australia, is a great example.

In the audience today we have a tremendous mix of people with experience and interest in product safety. I understand there are 23 countries represented here today and that you have a range of backgrounds: retailers, manufacturers, academia, industry organisations, standards organisations, consumer representatives, clinicians, law firms, test houses and, of course, government.

Bringing such a range of experts from around the world together allows us to draw great benefit from the diversity of experience you represent. The opportunity to develop links and improve our understanding of different perspectives is invaluable.

Introduction

Product safety is important to everyone. Whether it be working around the home or at play there are countless consumer products which pass through our hands; children’s toys, cosmetics, bicycles, hot water bottles (not so much here in sunny Queensland) and sunglasses (probably a better example for our Gold Coast) to name just a few.

Product safety is a shared responsibility in Australia. Everyone in the supply chain has a role to play; manufacturers, importers, distributors, and retailers.

There is, of course, an important role for regulators. The ACCC is the national agency responsible for product safety. Broadly, it is our job to recommend where product safety regulation is required and to enforce and encourage compliance with the laws and increase consumer awareness about the hazards.

Today I will tell you a little more about our experience by addressing three main themes;

  • First, product safety reforms in Australia have been significant in the past five years.
  • Second, product safety is an enduring enforcement and compliance priority for the ACCC.
  • Third, in an increasing global marketplace, international co-operation and collaboration on product safety is essential.

Product safety reforms in Australia have been significant in the past five years

In the past five years there has been a dramatic shift in product safety regulation in Australia.

Reforms have provided us with a fully harmonised product safety regime, better laws and improved hazard identification processes.

There were three key Productivity Commission reports commenting on product safety.

First, in 2006 the Productivity Commission reported on its review of the Australian Product Safety System.

Second, recommendations contained in the Productivity Commission 2008 review of the consumer policy framework also affected the product safety system.

A third relevant report, also released in 2008, was the Report into Chemical and Plastics Regulation.

Changes arising from the first two reports, were agreed by the Council of Australian Governments (CoAG) in 2008 and 2009.

The reforms flagged a significant product safety role for the ACCC.

Harmonised product safety regime

Prior to the reforms product safety standards and bans could be made by all State and Territory governments as well as the Commonwealth – nine jurisdictions providing the potential for nine different approaches to the same issue.

This changed on 1 January 2011, now only the Commonwealth can make permanent regulations, although the states and territories have retained the power to make interim bans. Importantly the states and territories have continued to enforce the regulations.

In preparation for this regulatory change the ACCC worked with the States and Territories to identify the products that required regulation so that on 31 December 2010 Australia went from having a patchwork of more than 177 standards and bans to having just 56 on 1 January 2011.

This was a tremendous simplification of the system and, as I noted, it removed many overlapping but differing requirements and also removed regulation that was no longer required.

I am pleased to say that we are further improving the regulatory regime through our strong relationship with Standards Australia.

We are working together to ensure an increasingly close alignment between the voluntary and mandatory standards making processes with a strong focus on international harmonisation.

Harmonising information was also on the cards during the reform process. The product safety Productivity Commission report recommended providing better information to consumers and businesses through a ‘one-stop shop’ internet portal.

This has been established and delivered through the Product Safety Australia website www.productsafety.gov.au. The website complements the revamped Recalls Australia website www.recalls.gov.au, which lists all safety recalls that take place in Australia whether they fall under the purview of the ACCC or other regulators, such as the food and transport authorities. These online portals have received very positive feedback from industry in particular.

Other communication mechanisms have also been significantly developed over the past five years with a particular focus on use of social media: we now have several apps for smartphone and tablet devices; we have a You Tube channel; a Facebook page; are active on Twitter and frequently post information in the ‘blogosphere’.

We have also used online tools such as webinars to engage with local and international suppliers to ensure they understand their obligations of supplying safe products in the Australian marketplace.

Improved hazard identification processes

Another change that was incorporated into the Australian Consumer Law is the mandatory reporting requirement.

Suppliers must now notify the ACCC of incidents they become aware of where a person has received a serious injury that they, or someone; associates with a consumer product. This notification is required within two days.

The Productivity Commission saw the introduction of this requirement as an important step in ensuring that government is alerted to emerging issues at the earliest possible point.

The ACCC now receives over 2500 mandatory reports every year and the reform has proven to be useful.

While many of the injuries reported are at the lower end of the ‘serious’ severity scale others are not and the information has allowed the ACCC to identify issues where a recall is warranted and our intervention has been necessary to ensure that this has occurred. Of course, less serious injuries are also important and the data, as it grows, is allowing us to look for hidden trends.

During 2012, 79 assessments indicated the need for further action. For example, information reported concerning potential finger amputation associated with prams and strollers led to an extension of an Australian recall of the prams involved and is being considered by the Standards Australia committee CS0-20 in its current review of the Australian New Zealand standard for prams and strollers.

When a cluster of Mandatory Reports are received, and there appears to be a significant hazard associated with the type of product being implicated, the ACCC conducts an investigation to determine whether there is a root cause.

One such investigation of ladders resulted in five recalls of over 51,000 folding ladders that failed to meet key safety requirements of the standard they claimed to comply with. As a result of this work, the NZ Ministry of Consumer Affairs, which has also experienced problems with ladder safety, has collaborated with the ACCC to ensure that our respective markets are cleared of ladders that are unsafe.

The introduction of this change has been complemented by the introduction of new processes and systems that assist the ACCC to identify and act on hazards at an early point; another of the Productivity Commission recommendations.

We now regularly review overseas recalls, monitor a range of other data sources and have some links directly into the health system, although we are still working on improving in this last area.

We now have more than three years of data in our ‘Clearinghouse’ system and so are building up a far better picture of product safety concerns in Australia than has existed previously.

Our Clearinghouse is complemented internally by the introduction of new systems and processes for creating and managing intelligence. This has been a particular focus within the past 12 months and we are now at the point of having intelligence reports that draw together and analyse information from a range of internal and external data sources supporting almost every area of our product safety work.

As a result we will increasingly target our market surveillance on problem areas. Our new and revised regulations will benefit from significantly enhanced market analysis and our compliance programs will be able to target problem areas more effectively.

During the next year we will be focussing on improving our intelligence around consumer risks. At the moment, we take a top-down, supplier centric view of markets. But analysing the consumer side will let us better understand product safety risks, particularly for disadvantaged consumers, than is possible from looking solely at suppliers and products. We will also be building up our capability to analyse online markets by looking at new data sources, tools and techniques.

Recalls

The reforms have also led to a significant improvement in the management of recalls. The Productivity Commission recommended that a review of recall effectiveness be undertaken. This was done in 2009. The recommendations have since been implemented and we are now reviewing our progress.

A major outcome of the review we undertook was a greater focus on recall communication. Up until 2009, most recalls were only communicated to consumers via newspaper advertising. Our review noted that communicating a recall through a broad range of mediums would increase the likelihood of recall effectiveness.

We have since worked with suppliers on their recall communication. A sample of one hundred recalls (conducted after 2010) showed that eighty-six per cent of recalls used two or more methods to communicate their recall. Online methods of recall advertising were used seventy per cent of the time, and newspapers were used thirty per cent of the time.

The ACCC does collect data on the amount of product that has been recalled although our older data does not distinguish between product retrieved from the supply chain and that being returned by consumers. While accepting that the absence of this differentiation limits the usefulness of our data it is none the less the case that the average amount of product recalled in ACCC monitored consumer recalls has jumped from thirty-nine per cent in 2009 to fifty-six per cent in 2013. One would think that improved recall communication strategies, have surely contributed to this change.

Recall awareness has been improved over this time through the introduction of apps to supplement the recalls website.

In October 2011, the recalls iPhone application went live and has since been downloaded more than 7888 times. In August 2012, the recalls Android smart phone application was released and it has been downloaded more than 1950 times.

These applications send the recipient an alert as soon as a recall is posted to the Recalls website in their nominated areas of interest. We also share every recall on Twitter and Facebook; it has been quite extraordinary to see how widely some of these recalls have been communicated. One example is the recall of the Infant recliner Nap Nanny in June this year. On Facebook alone, this recall reached over 180,000 people and was shared over 2,000 times.

Another example relates to a recent recall of a banned high powered novelty magnet which was tweeted to around 15,000 recipients within 24 hours of the recall being announced. Other brands of these products have sadly caused the death of an 18 month old child and have seriously injured a number of other children in Australia, so the benefit of being able to reach so many consumers so rapidly cannot be over-stated.

Chemicals

I mentioned that there were three Productivity Commission reports; the last of those concerned chemicals and plastics.

We see chemical issues as being of increasing concern. Often when a product safety issue has made its way to the media it relates to a chemical. Chemicals such as phthalates, BPA and formaldehyde have all attracted the attention of the public recently.

One of the recommendations of the Productivity Commission’s chemicals and plastics review was that Australia’s industrial chemicals risk assessment agency, NICNAS, should implement an accelerated chemical assessments program to review more than 30,000 chemicals that were in use when the agency was established, but that had not been safety assessed. Some 3000 of these ‘grandfathered’ chemicals are now being assessed over a four years, with the program now being in its second year.

The ACCC is likely to receive recommendations from this assessment process, and indeed is currently working on two recommendations relating to around 15 chemicals.

Product safety is enduring enforcement and compliance priority for the ACCC

I am very pleased to see the way our capacity to address product safety issues has been strengthened during recent years. I and my fellow commissioners, especially Deputy Chair Delia Rickard, are very serious about product safety.

Product safety is an enduring enforcement and compliance priority right alongside issues such as cartels and misuse of market power.

You will be hearing more from us on safety enforcement.

Already the ACCC is far more active in product safety compliance and enforcement than it was prior to the implementation of reforms.

For example, there were 429 recalls announced by the ACCC in FY2012-13, 262 of which were directly monitored and managed by the ACCC.

Some 91 of these were the direct result of negotiation by the ACCC, resulting in over two million additional hazardous products being recalled from the Australian market.

In some cases the ACCC has identified safety issues across a market segment and has negotiated a number of recalls to ensure that the problem has been rectified across the market segment. This has occurred in relation to teeth whiteners and hair straighteners.

In the case of teeth whiteners many products on the market contained hydrogen peroxide in levels in excess of safety limits, sometimes by a considerable margin. The ACCC negotiated the recall of 28 different teeth whitening products and the market has now adjusted. The ACCC also continues to work with online marketplaces such as eBay to ensure that filters blockout online sellers of non-compliant product.

Some 33 of the 91 negotiations conducted in 2012 were associated with Mandatory Reports of injuries sustained by consumers as young as two years old. Reported injuries have ranged from:

  • a decorative ethanol burner that caused severe burns to over 50 per cent of a person’s body,
  • a number of toddlers whose fingertips were amputated or lacerated by a defective stroller,
  • an infant who was burnt over her hands and face when a DVD player exploded in her lap,
  • a plasma screen television with a faulty stand that fell onto an infant and fractured his arm, and
  • a number of unsafe ladders that failed to comply with the safety standard and caused various broken bones and fractures.

In the lead up to Christmas last year, the ACCC partnered with state and territory fair trading offices to conduct surveillance covering toys for children aged under three, toys containing lead and other heavy metals, aquatic toys, projectile toys, bicycles and banned products.

This surveillance resulted in products from over 3300 individual retailers, including internet-based traders Australia-wide, being examined for safety and compliance. More than 94,000 product lines were surveyed, resulting in the removal from sale or seizure of over 11,000 products.

During the 2012 – 2013 year, the ACCC itself conducted surveillance in 1442 individual sites, including both bricks and mortar sellers and online sellers of consumer goods. We inspected or tested over 16,000 products which resulted in over 100 product lines being taken off the market.

Enforcement action

Important results from the ACCC field work included obtaining court-enforceable undertaking and payment of three infringement notices totalling $19,800 from G & R Wills Holdings Pty Ltd for supplying baby walkers and offering two models of strollers which did not comply with the relevant safety standards.

G & R Wills had supplied the unsafe products to remote Indigenous communities in the Northern Territory.

G & R Wills agreed to initiate a $25,000 bi-lingual product safety campaign for parents of young children living in remote Indigenous communities about the potentially harmful features of prams and baby walkers. Radio broadcasts in Yolnu Matha and English have now been produced and broadcast on the Aboriginal Resources and Development Services radio network which covers many of the affected communities.

In another matter, the Australian Federal Court fined Cotton On Kids Pty Ltd $800 000 for supply of children’s nightwear that did not comply with the mandatory standard and $200 000 for misrepresenting that children’s nightwear was low fire danger when the garments, in fact, represented a high fire danger; a total of $1 million.

The garments were labelled ‘low fire danger’ but in fact the nightwear was so flammable that they should not have been supplied in Australia at all. These breaches were very serious as they placed the safety of young children at risk.

Online surveillance

One question we are often asked in relation to ACCC enforcement and compliance programs is what is being done in relation to online sales.

I can assure you that we do target online sellers in all our market surveillance programs and we have taken action in relation to them both on product safety matters and in relation to other breaches of the Australian Consumer Law.

Actions have included Overstockoutlet recall of Freestyle steel frame bicycle helmets (2007), the recall of child restraints by an Australian eBay seller (2009), and criminal prosecution of online trader Philip Robinson resulting in conviction and orders to pay nearly $15,000 in fines and costs in relation to the supply of non-compliant infant sleeping bags known as Growbags (2011).

Having said that, online selling is a big challenge facing regulators, including product safety regulators. However, the online world also brings some new opportunities for regulators, businesses, consumer groups and international networks to work together to tackle common product safety consumer protection issues.

While some online issues are not necessarily ‘new’, e-commerce business platforms and consumer expectations are constantly evolving.

Through our work so far, we have identified what we think are some key product safety concerns. Some of these are more obvious, like the inability to physically inspect products for warning labels or to determine if a particular safety mechanism is present. For example, a website may not show the required ‘5 point harness’ in a vehicle restraint.

To get a better view of the consumer experience, we conducted a number of internet ‘sweeps’, examining popular Australian and international websites offering goods to Australian consumers.

We looked for compliance concerns, but also for examples of best industry practice. We identified that there are measures business can put in place to address the online consumer challenges around accessing product information and knowing what you are about to buy before the final ‘click’. Some of the best practices we identified, for example, were in the cosmetics industry were the use of high-quality product photographs and clear ingredients lists that could be accessed by online consumers before ‘checking out’. But there is still work to be done here to improve product safety outcomes.

The starting point, and our message, is that all businesses supplying goods to Australian consumers are required to comply with the Australian Consumer Law.

This includes, importantly, our product safety provisions, bans and standards. The practical challenge to securing product safety compliance in the context of global e-commerce is not an issue that is peculiar to Australia.

We are pleased to report that we are working closely with our international counterpart regulators to address some of these issues. We have also, for example, had a range of successes in having unsafe products removed from online.

In the online world, we hear that having unique ‘value proposition’ is crucial to business performance. We think that there are steps businesses can actively take to adopt what we could call ‘online best practice’.

For example, online businesses can use high-quality product images and descriptions, upfront product safety warnings, and informative pop-up messages. We will be putting our position and our compliance expectations through a public report on these issues we plan to release before the end of the year.

Before I leave the topic of the seriousness with which we take compliance with our product safety laws I would like to raise another issue of current significant concern to the ACCC.

Retailers compliance

As a result of our involvement in recall processes the ACCC has noticed that the trend towards greater direct sourcing of less expensive products from overseas by retailers of “fast-moving consumer goods” correlates with an increase in consumer injuries and a sharp increase in the number of recalls of those goods.

We are concerned by the incidence of retailers who appear to be supplying unsafe goods.

We are also concerned by indications that some retailers appear not to have satisfactory processes in place to properly meet their responsibility to ensure the safety of the goods they sell.

The ACCC has other enforcement options, in addition to the specific product safety provisions, which it will apply if retailers contravene the law as a result of taking short-cuts in their product design and purchasing procedures. To avoid contravening the consumer protection laws, retailers need to consider their processes so that they do not put unsafe goods on their shelves.

We are extremely concerned to think that quality assurance processes may be slipping resulting in consumers being injured.

Let me be very clear: if retailers are discovered to have taken short-cuts in applying basic quality assurance and control measures, at the expense of consumer safety, we will take action in any way we can.

If deficient purchasing processes lead retailers to offer unsafe goods for sale, it may be appropriate to alert the public to concerns through warnings, or potentially to pursue the imposition of more stringent requirements.

When an unsafe good is recalled, it’s not always sufficient for a retailer to point to a test certificate. Good practice should be followed to ensure that due care has been exercised.

For example, retailers sourcing their own products should be able to show that they have properly assessed the goods for safety, fitness for purpose, and legal compliance; first among these is safety.

I would certainly feel assured if companies used fully trained, qualified and experienced personnel to assess goods and approve them for mass production. When retailers decide to boost profits by cutting out the “middle-man”, they assume all of the responsibilities that the “middle-man” once assumed.

Similarly, it would be appropriate for proper quality control measures to be put in place to ensure that the goods that are actually produced bear more than a passing resemblance to the goods that were tested and certified as safe. I would feel assured:

  • if factory audits were performed regularly to ensure that proper controls are in place;
  • that raw materials have been tested;
  • that relevant assembly line processes are followed and quality checks are performed, and  
  • that properly managed pre-shipment inspections are carried out with adequate supervision by qualified staff appointed by the retailer to take on that responsibility.

ACCC officers are closely monitoring consumer complaints associated with these goods, as they do in connection with any consumer good, and any evidence that retailers have taken less care in procuring those goods than is appropriate and to be expected of a major importer with extensive market penetration, will be taken extremely seriously.

Australians want affordable goods, but more than that consumers want to be safe, and want their children to be safe, when using these goods.

Today, I am telling Australian suppliers to get their product safety compliance programs in order.

Increasing global marketplace, international co-operation and collaboration on product safety is essential

Now, I would like to turn to the third theme I mentioned earlier, international issues.

We are, of course, very conscious that product safety is not just a domestic issue. Clearly it is a global issue, and increasingly so as a greater proportion of products come from the same off-shore manufacturing countries, and we see significantly developing online sales.

The ACCC has been taking steps to play an active role in international product safety issues. There is much we can gain through international co-operation and collaboration and I hope too that the ACCC has much to offer.

Our contribution to date has been primarily through the OECD Consumer Product Safety Working Party, which we currently chair, and through the International Consumer Product Safety Caucus, or ICPSC.

Through these forums, and through our participation in ICPHSO forums, the ACCC has established valuable links with other product safety regulators and stakeholders.

The ACCC is aware of the importance of aligning our product safety requirements with others.

We appreciate that this is a difficult area, particularly in relation to known product hazards where different but firmly established requirements are in place.

However, we are very encouraged by our participation in the Pilot Alignment Initiative, led by our colleagues at the US Consumer Product Safety Commission. This initiative has focussed on three products.

The agencies involved in the initiatives have worked collaboratively to agree on the hazard presented by the products and on the measures that would address the concerns.

This has been a learning process and although well advanced, it is not yet complete. It is through perseverance and the implementation of projects such as these that we will make advances in understanding how the difficult process of alignment might be approached and achieved.

We are encouraged too by the informal collaboration that we have seen take place amongst regulators in relation to emerging issues.

I know that when the ACCC considered the issue of small strong magnets in 2012 staff were very appreciative of the information and advice they received from their international counterparts.

I believe that there is a high degree of alignment in relation to how this particular issue has been addressed internationally. I attribute this in good measure to the sharing of information, to the extent that this was possible, amongst the relevant parties.

We are also pleased to see other areas of increasing collaboration amongst regulators.

I know that the ICPSC and the OECD Working Party have held a number of virtual symposia to share their understanding of new issues. Most recently the ACCC and OECD hosted a virtual symposium in relation to online issues.

I understand there is also interest in the possibility of collaboration on education activities and market surveillance. I look forward to participating in these initiatives.

We have also been very pleased to see the development of the OECD Global Recall portal. This website brings together recall data from the US, Europe, Canada and Australia. Quite a number of other countries have expressed interest in participating as the portal is developed and enhanced.

The ACCC has a role to play in the Asia-Pacific region. We have increased our activities in this region in relation to other areas of the ACCC’s work. We hope to do the same in relation to our product safety responsibilities in coming years. This conference, I have to say, is a great start.

Conclusion

This brings me to my closing remarks today.

The ACCC is well placed to regulate product safety in Australia. As the result of structural and legal reforms we have the right processes and systems in place.

Product safety is one of the ACCC’s highest priorities. We are doing more than ever behind the scenes. We are calling on Australian retailers and suppliers to step up their compliance.

On the international stage we think there are some great opportunities. Collaboration and cooperation are essential for product safety regulation in our region. The ACCC aims to be a leader.

We trust that this forum will provide you with a chance to learn from experts in the field and talk about some of the challenges before us. Thank you, and all the best for the rest of the conference.

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