Chair Rod Sims addresses the National Consumer Congress and formally announces the 2019 Product Safety Priorities. Mr Sims spoke about the importance of a general safety provision in Australia to make it illegal to sell unsafe goods; detailed the work the ACCC is doing to protect vulnerable and disadvantaged consumers; and discussed emerging issues in online consumer safety.
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Introduction and thank you
Thank you all for being here today at our National Consumer Congress. It is great to see so many familiar faces.
This event is always particularly important for me, because it reflects just how integrated the work of the ACCC is with the concerns of the consumer sector. Combined with the outstanding work from financial counsellors, your contribution truly makes a difference.
We see this through the many potential enforcement matters you refer to us and your first-hand knowledge of current and emerging issues.
In many ways you are the ‘canary in the coal mine’ for the ACCC.
Today I will:
- Formally announce our product safety priorities for the coming year.
- Describe what we’re doing to protect vulnerable and disadvantaged consumers
- Discuss emerging concerns around privacy, data and online consumer safety
1. Product Safety Priorities
Working with our state and territory counterparts, in 2019 we will continue to build on some of our 2018 priorities, and we have identified some new areas for focus. Today, I am pleased to announce the ACCC’s 2019 Product Safety Priorities.
Of course, the Takata airbag recall remains one of our top priorities. We are working with industry, and state and territory jurisdictions to ensure the effectiveness of this exceptionally complicated recall. In 2018 this issue took more Commission time than any other.
We are also working to ensure that button batteries do not end up in the hands of our most vulnerable consumers: infants and children. Each week too many Australian children present to hospital with injuries as a result of button batteries. This must change.
This year, we will also be working with states and territories to address unsafe sleeping products for infants. We have taken enforcement action against suppliers and manufacturers selling goods that put infants at risk, and will continue to do so.
General Safety Provision
Many people are surprised to learn that it is not illegal to sell unsafe goods in Australia.
Many think there’s already a law that says goods have to be safe. Well, there isn’t, but there should be.
While mandatory safety standards and bans regulate some of the most dangerous consumer goods, our current product safety laws are primarily reactive. They generally come into place after consumers have been harmed.
Our product safety framework is lagging behind our international counterparts. Many OECD countries have already made it illegal to supply unsafe consumer goods.
The ACCC estimates that each year the cost of harm from unsafe consumer goods in Australia is at least, and likely much more than, five billion dollars.
According to our analysis, each day 2 people are killed and 145 injured by unsafe products.
Australian consumers are suffering injuries and deaths caused by every day products that are in our homes and work places.
Examples of harm include electrocution from faulty appliances, burns from ignited flammable clothing, choking on children’s toys, suffocation in cots and beds, and drowning in swimming pools.
For consumers, a general safety provision will give greater confidence that the goods they buy are safe. And for business, it will create a level playing field so that those firms who deliberately supply cheap, unsafe products do not derive a financial benefit.
Another issue we are grappling with is the rise of interconnected devices, smart products, and the ‘Internet of Things’. Indeed, the theme for this year’s World Consumer Rights Day is Trusted Smart Devices.
Most of you will already have such a device in your pocket, your bag, on your wrist, and in your home.
Along with concerns about privacy and consumer data, these products also pose risks in a product safety sense.
Interconnected devices confront all sorts of new risks. They could be threatened because of a software update, lapse in internet connection, malware, or third party hacking. These scenarios can all lead to a product that doesn’t function as it should: which in turn poses a safety threat.
Car driving systems have been taken over by hackers. Braking systems have failed due to malware. Smoke detectors have failed due to lost connectivity. And a recharging lithium battery could be compromised and cause a fire.
This is the practical front for consumer product safety threats in an online environment. Some product safety risks only become apparent to us in the future, or as technology develops further.
Our challenge is in anticipating these risks before they arise and making sure the regulatory framework is fit for purpose. We also need informed consumers. The ACCC will look to increase public awareness of contemporary safety hazards as a priority in 2019.
This year’s Product Safety Priorities, I think, strike the balance of seeking to protect consumers across a range of industries, and indeed in a range of circumstances.
2. Protecting disadvantaged and vulnerable consumers
Since we spoke at last year’s congress Australian Consumer Law (ACL) penalties have been lifted to $10 million, or three times the benefit from the conduct or, if that can’t be calculated, 10% of annual Australian turnover.
We have been advocating for this for some time.
Now we need to ensure that the clear message from government is headed.
This is even more important than normal when it comes to dealing with companies and individuals who target disadvantaged and vulnerable consumers.
As an example it was especially pleasing when earlier this year the Federal Court handed out its highest ACL penalty ever against We Buy Houses and its director Rick Otton, some $18 million in total.
Now we need penalties that large companies will notice.
The consumer sector brought the Rick Otton matter to us. It was a business model that preyed upon the vulnerable and one that some of you had been campaigning against for many years. A great example of how we can work together to stop appalling conduct.
Another of our challenges in protecting disadvantaged and vulnerable consumers involves product safety.
Our work on the Takata airbag and Samsung washing machine recalls, along with research the Australian National University is doing for us on the Takata recall, is showing us that recalls are significantly less likely to be responded to in locations where disadvantaged consumers are over represented.
We are doing a number of things to address this including outreach work in Indigenous communities to find affected airbags and washing machines, but we need all the help we can get on removing these dangerous products from Australian homes.
I would ask those of you involved working directly with these communities to help us get the message out and achieve greater uptake on product recalls.
Several streams of our 2019 work will directly focus on affordability issues for essential services and will, we hope, deliver real benefits for consumers on low incomes.
In the telecommunications area we are focusing on the cost of NBN services, particularly their 12/1 products. The intention behind the NBN was always that consumers should be able to transition to a basic, but very usable broadband service and be paying no more than they were in the past. We must make sure this happens.
In energy we are continuing to push the recommendations from our Retail Energy Pricing Inquiry report with some success given the government’s recent announcements on the default market offer and conditional discounts.
Not only will these recommendations bring down prices, they will make it easier to compare and remove the confusopoly that has been Australian energy pricing. We will be closely monitoring this to ensure that consumers really do benefit from these reforms.
And for consumers in Northern Australia, we have an inquiry into the cost of building and contents insurance above the Tropic of Capricorn. We’ve found that consumers in the north are often paying more than double that paid down south. The cost is leading to some becoming uninsured. We are aiming to develop recommendations that can deliver real relief.
Work we are doing on digital platforms, along with the recent Federal Court decision in our Medibank appeal that found that while Medibank acted harshly and unfairly, that was not enough to establish statutory unconscionability has caused us to reflect. Indeed this has caused us to give consideration to whether a general unfairness prohibition may be beneficial, in order to prohibit unfair business practices under the ACL.
A reform that I know is close to the hearts of many of you. It is an issue we are actively considering, including what criteria must apply for conduct to be considered “unfair”.
I also believe that the work we are doing to introduce a consumer right to access their own data and provide it to accredited third parties has the potential to deliver enormous cost of living savings to vulnerable and disadvantaged consumers. This right, known as the Consumer Data Right, will be rolled out first in banking, then energy and then telecommunications before being applied to other sectors of the economy.
While being totally aware of the need to get the privacy and security settings right for the CDR, and of the challenges of overcoming inertia, we fundamentally believe the CDR will be a game changer for competition and will deliver lower prices and better services for consumers.
ACCC Commissioner Sarah Court will be telling you more about this after lunch.
3. Privacy, data, and online consumer safety
Protecting consumers and ensuring fit-for-purpose laws is vital work for the ACCC. This work has now extended to issues of privacy, data and online consumer safety.
These online products and services create a new generation of consumer risks.
Our work on the Digital Platforms Inquiry has shown that most consumers care about how much information digital platforms, like social media platforms, collect about them; and how that data is used and disclosed to third parties.
Companies likes Facebook and Google are multi-sided platforms that are stunningly commercially successful. The more consumer attention they attract on one side of the platform, the more valuable they become to the other side; the advertisers.
A significant part of that value, of course, is the depth and breadth of consumer insights that digital platforms can generate from the data they access or control.
Consumers have reason to be concerned. The consequences of providing their personal information online has the potential to extend beyond targeted advertising and carefully curated content to include increased dangers from invasions of privacy, misinformation and online fraud, as well as the potential for discriminatory conduct.
Our preliminary report in the Digital Platforms Inquiry found that there are issues with a lack of transparency and meaningful options in terms of how, and how much, personal data is collected about consumers and how that personal data is used and disclosed. This can prevent consumers making an informed and genuine choice over these important issues.
Consumer protection will be at the forefront of our mind as we finalise our Digital Platforms Inquiry.
The ACCC has much to do in 2019.
There are of course, many markets that are not working well for consumers. Financial Services and electricity are but two examples.
The corporate sector complains about more regulation. Sometimes this seeks to address the fallout from a lack of competition, but sometimes there are deeper issues.
Companies need to understand that the community expects markets to work for the benefit of consumers.
There is much to debate and do in 2019.