Risk e-Views Vol 2 October 2010 – Changing Consumer Laws

Deadline for implementation of new Australian Consumer Laws approaching fast

The Trade Practices Act is getting more than a name change to the Competition and Consumer Act 2010 on 1 January 2011. You may win on reduced red tape with the new national approach under the Australian Consumer Law, however, are you ready for your new responsibilities?


What’s new?

Amongst a number of changes that are designed to provide improved protection to consumers and small business are:

1. Protecting consumers before the event

  • A term in a consumer contract is void if the term is unfair and the contract is in a standard form contract such as mobile phone companies use (similar change for ASIC Act for financial services) – NB This part of the changes commenced from 1 July 2010.
  • Broadening of guarantees of acceptable quality of goods.
  • Extension of loss or damage from supply of the good OR of product related services to a reasonably foreseeable misuse of the goods.

2. Compliance/Remedial actions

  • Suppliers to report consumer goods OR product related services which cause death, illness or serious injury.
  • Increases powers for the ACCC to require a person to provide information/documentation.
  • Increases powers for ACCC inspectors to enter premises to which the public has access and purchase goods and/or take photographs.
  • Broadens the court’s ability to order redress for loss/damage to third parties not associated with court proceedings.
  • Allows ACCC and ASIC to issue public warnings.
  • Introduces civil pecuniary penalties for the ACCC and ASIC (for financial services) to utilise.
  • Broadens director/officer disqualification provisions under the Act and under the ASIC Act.

What’s the risk?

  • Harder to effect deterrents for breaking consumer contracts – increased costs.
  • What is acceptable quality? What are our representations about our goods or related services? Where/how are they made?
  • Risk assessments need to be broadened to identify more avenues for “misuse” of products.
  • What is serious injury or illness? Who is a supplier? Who in the supply chain has an obligation? What if one or some report and you don’t?
  • Will reporting an incident represent an admission?
  • Reputation damage from public warnings – how can you manage the regulator?

Why worry?

Of course there is less need to worry if you are aware of the changes to the law and you are organised. However, if you are not, you should be aware that the main regulators, the ACCC, ASIC (for financial services) and the various state fair trading bodies are now all armed with more clout.

The new laws are quite clear on the options for regulators to pursue if they believe there has been a breach. It is more likely than not they will be looking to make their presence felt sooner than later to draw attention to the new laws. So, if you are someone who operates on a fine line between compliance and non-compliance or you are a household name, you should ensure you take a second look at the new regime and put your risk management strategies in place.