Ford Motor Company of Australia Limited

Company or individual details

  • Ford Motor Company Australia Limited
    004116223

Undertaking

On 27 July 2017 the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Ford Motor Company of Australia Pty Ltd (Ford) in the Federal Court in relation to Ford's response to customer complaints about Fiesta, Focus and EcoSport vehicles fitted with the PowerShift transmission.

On 26 April 2018 the Federal Court, by consent, declared that:

Between 1 May 2015 and 29 February 2016, in connection with the supply to customers of Ford motor vehicles fitted with a ‘PowerShift’ transmission, Ford:

  1. failed to ensure that customers who had purchased those vehicles were provided with adequate information about their legal rights and potential legal rights (including potential rights under the consumer guarantee provisions of the Australian Consumer Law (which is contained in Schedule 2 to the CCA));   
  2. had and gave effect to processes for dealing with and responding to complaints from customers about the PowerShift transmission and requests for refunds or replacement vehicles that:
    1. failed to ensure that proper consideration was given to the individual circumstances and actual or potential legal rights of customers;
    2. resulted in many customers accepting offers made by Ford Australia because customers were told refunds or no-cost replacements were not an option and had limited time to accept offers, which were conditional on customers entering into settlement agreements that included non-disclosure provisions; and
    3. failed to ensure that customers who signed settlement agreements understood that they may be compromising their legal rights; and
  3. had inadequate processes which caused many customers to purchase new replacement vehicles at a significant additional cost to the customers,

and thereby engaged, in trade or commerce, in conduct that was in all the circumstances unconscionable in contravention of s 21 of the Australian Consumer Law.

The Federal Court ordered Ford pay a penalty of $10 million and costs.

In resolving the proceedings, the ACCC accepted a section 87B undertaking from Ford under which Ford will:

  • Establish an independent complaints review program to review consumers’ requests for refunds or replacements vehicles made to Ford between 1 May 2015 and 1 November 2016. This will operate for 12 months from the date of commencement of the undertaking. Eligible consumers can register to have their complaint reviewed at www.ford.com.au.
  • Make available to all Ford vehicle owners Field Services Actions for the consumer’s vehicle which provide information relating to known issues with their vehicles, as well as the provision of access to a complete history of the repairs of manufacturing defects performed on the consumer’s vehicle. This will remain in place until at least 30 June 2021.
  • Implement a range of consumer law compliance activities, including:
    • the appointment of an independent third party to advise on the adoption and implementation of an upgraded compliance system
    • an upgraded complaints handling system, including a Customer Service Charter that will be available on Ford’s website and complaints handling procedures that are designed to ensure that consumers are not denied remedies under the consumer guarantees
    • the provision of information about consumer guarantee rights and obligations to all consumers who purchase a new Ford vehicle at the time of purchase
    • a test call program, to monitor the accuracy and type of information that Ford’s call centre provides to consumers
    • consumer law compliance training for Ford employees and Ford dealers
    • the appointment of a compliance officer to implement, review and monitor Ford’s compliance program and complaints handling procedures
    • annual reviews of Ford’s compliance program by an external advisor, with review reports provided to Ford’s board of directors and the ACCC.

The consumer law compliance obligations will remain in place until at least 30 June 2021.

On 29 June 2018 the ACCC agreed to Ford amending the wording of the Notices in Annexure C to the Undertaking. These amendments clarify that, as set out in the eligibility criteria in clause 5.3 of the Undertaking, consumers who entered into a settlement agreement or otherwise received a remedy from Ford during the relevant period (other than a full refund or no-cost changeover into an equal value vehicle) are eligible to participate in the Independent Complaints Review Program.

On 30 August 2018 the ACCC agreed that under the Independent Complaints Review Program, the Independent Arbiter will take reasonable steps to make a determination for both eligibility and entitlement within a total of 60 days of the Independent Arbiter receiving a claim, which includes information submitted by a consumer and Ford Australia. Previously, the Independent Arbiter was required to take reasonable steps to determine eligibility within 30 days, and entitlement determinations within a subsequent 30 days, of receiving a claim.