There were a number of potential improvements to the consumer protection provisions of the Trade Practices Act 1974, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said today.*
These potential improvements would be outlined in detail in the ACCC's submission to the current Productivity Commission's inquiry into the consumer policy framework, he said.
"The broad flexibility of the law is one of its key strengths, which makes it well suited to its task", Mr Samuel said. "Nevertheless, there are a number of potential areas where improvements could be made."
These included:
- civil pecuniary penalties
- consumer redress, and
- uniformity of fair trading laws.
"Currently, penalties for wrongdoing can only be obtained through criminal proceedings," he said. "The ACCC is committed to taking criminal actions where the conduct warrants such a response. However, criminal actions are slow and require significant resources, not to mention the need to meet a very high standard of proof to achieve a result. The ability to obtain civil pecuniary penalties, declarations, injunctive relief, and other measures such as corrective advertising within a single action would significantly enhance the ability of the ACCC to obtain effective outcomes and provide a higher degree of deterrence.
"The second issue is the need for the ACCC to have the ability to seek court orders to obtain consumer redress for large numbers of consumers. Currently, the ACCC can only obtain consumer redress in relation to persons who provide written consent. This limits the ability of the ACCC to obtain such redress, due to the administrative difficulties associated with locating relevant consumers prior to taking an action. In cases involving large numbers of consumers over a broad geographic region – exactly the type of case the ACCC is best placed to take, and increasingly likely to arise as markets become more national and international in character – the difficulties of obtaining written consent from thousands of consumers is prohibitive."
If the ACCC had the ability to seek orders for redress for consumers, it would increase deterrence against wrongdoing, and provide consumers the ability to gain redress, particularly in situations where many consumers may have lost small amounts.
"The third issue … is the need to reduce the level of inconsistency between state, territory and commonwealth fair trading laws.
"Since the introduction of the current form of state and territory fair trading laws during the 1980s, the benefits of uniformity have been well recognised by all parties concerned.
"However, in practice, uniformity has been difficult to achieve. Some of the areas of inconsistency include:
- unfair contract terms legislation in Victoria
- different standards for what constitutes harassment or coercion
- different requirements in relation to the conduct of door-to-door and telemarketing activities
- different definitions of pyramid selling schemes, and
- different jurisdictions have different enforcement powers – for example some have the power to issue public warning statements, issue infringement notices in certain circumstances and issue notices requiring a trader to substantiate published claims or representations.
"At the same time as the level of divergence between laws appears to be increasing, the need for uniformity is becoming more urgent.
"The costs of increasing lack of uniformity are significant. For business, there are costs associated with meeting different requirements in different jurisdictions. While business may be able to minimise its costs by complying with the jurisdiction with the highest level of protection, there may be considerable 'hidden' costs associated with this – because business is taking on the burden of meeting a standard that perhaps the majority of Australian jurisdictions do not even believe to be necessary.
"The current system also imposes an increased burden on consumers to be aware of the different standards that may exist between jurisdictions, and can raise false expectations that protections that may exist in their home jurisdiction apply when dealing with traders in other jurisdictions.
"There is also a cost for governments and regulators in developing laws separately rather than pooling resources.
"As markets become more national and global in nature, the costs for business and consumers in particular are increasing."
Mr Samuel said that armed with the right tools, the ACCC would be able to continue responding to new challenges in a number of ways in particular by refining its approach to compliance to ensure that it is exercising its compliance role wisely.
"What is on offer is an improved, better coordinated and stronger protection regime. At the centre of the changes the winners will of course be all Australian consumers – as they should be."