The Government will be seeking the development of a national scheme of easily understood consumer protection laws to replace the current overlapping and sometimes inconsistent laws.There are a number of advantages to consumers and business (both small and large) in having a national scheme. As Australia is now a single market for many goods and services, it is difficult to justify the expense associated with local variations in consumer protection laws. Australian consumers believe they should have a fair go wherever they live; they should have access to the same rights and remedies regardless of their location. A uniform law would reduce confusion in cross-border transactions and make it easier for consumer affairs enforcement agencies to co-operate and to educate consumers and business alike.
This is, however, a matter that will require the cooperation of all State and Territory governments. The Government is committed to the process of further consultation that will be required if the goal of a national uniform scheme is to be achieved. This approach is in line with the recent recommendations of the Australian Law Reform Commission, in its report to the Government on Compliance with the Trade Practices Act 1974. The Commission noted the obvious advantages of uniformity and the widespread support in the community for such a scheme.
The Trade Practices Commission, soon to be formed into the Australian Competition and Consumer Commission, is responsible for enforcement of the Act. It will continue to do so in conjunction with new competition-related functions.
In the lead up to the 21st anniversary of the Act, the Government asked the Australian Law Reform Commission to examine how effective compliance with the consumer protection provisions of the Act had been since its commencement, and whether consumers and the Trade Practices Commission had access to quick, cost-effective and fair remedies for breaches of the Act.
The Law Reform Commission was convinced that the Trade Practices Commission was working well and was `... overall effective in achieving its objectives of eliminating restrictive trade practices and unfair market practices.' However, a number of problems were identified. These included a lack of understanding by both consumers and business of their rights and responsibilities under the Act, difficulties for individuals in seeking enforcement of the Act and limitations with monetary penalties.
In response to this report, the Government will implement some major reforms. Where the Law Reform Commission's recommendations also affect the competition parts of the Act, the Government will be raising these in discussions with the States and Territories.
Some of these reforms relate to the competition provisions of the Act. These will be pursued through the consultative arrangements which were agreed to with the States and Territories at the Council of Australian Governments meeting in April 1995. Those arrangements have been set down as part of the national competition policy package.
The introduction of a national consumer protection regime should assist in simplifying the laws of the nine jurisdictions in Australia (the States and Territories and the Commonwealth). This will make it easier to educate all interested parties about consumer protection provisions. To supplement these efforts, the Government has agreed that the Trade Practices Commission should expand its education and information role to cover remedies available under the Act.
The Trade Practices Commission will provide education and information on remedies available under the Trade Practices Act.The Government is also committed to improving mechanisms for consumer redress. The Trade Practices Act has always provided consumers with the right to initiate private actions against businesses which supply faulty products or engage in false and misleading advertising. However, there are barriers which sometimes prevent private enforcement, including the formality of court proceedings, the cost and lack of financial assistance. Reforms in this Statement, aimed at improving community access to the court system and providing affordable alternatives to the courts, will help to break down some of these barriers and assist consumers in seeking redress.
At the same time, the Government will provide the Trade Practices Commission with a greater capacity to take action on behalf of consumers through representative actions. Representative actions allow one person to take legal action on behalf of a number of people who are affected by a common problem. They remove many of the financial barriers which people face in initiating legal action, and give the courts a more efficient process for dealing with cases involving large groups of people.
The Government will remove current restrictions on the Trade Practices Commission's ability to take representative actions under the Trade Practices Act.This will mean that the Commission will be able to take a representative action for a contravention of any provision of the Act for which it has an enforcement role.
The Government will also reform the remedies and penalties available under the Act. Currently, the consumer protection provisions of the Act are ordinarily enforced only by criminal prosecutions. In a major reform, civil penalties will be available in addition to criminal penalties. This will ensure that the widest possible range of responses to contraventions is available to improve the enforcement capacity of the Trade Practices Commission.
The Trade Practices Commission will be provided with an enhanced enforcement regime in relation to contraventions of the consumer protection provisions of the Trade Practices Act. In addition to criminal penalties, civil penalties will be available.The Government is also committed to strengthening the ability of the courts to impose remedies for breaches of the consumer protection provisions of the Trade Practices Act. Currently, a monetary fine is the only significant punishment that can be imposed on a corporation. While these fines will continue to play a useful and major role, fines alone are not a sufficiently flexible response to cope with some minor offences, persistent breaches of the Act or situations in which there is a culture of non-compliance within businesses.
The Government will introduce a range of new remedies under the Trade Practices Act.The new remedies will include the ability for the courts to make adverse publicity orders, orders over aspects of a business's conduct, and orders directing corporations to undertake specified community service projects. In addition, the financial penalties for offences against the consumer protection provisions of the Act will be increased significantly.
Financial penalties for offences against the consumer protection provisions of the Trade Practices Act will be increased to a maximum of $2 million for corporations and $400,000 for individuals.
The Government has asked the Federal Bureau of Consumer Affairs to explore the options for a legislative scheme to provide consumers with a comprehensive set of post-sale rights, responsibilities and remedies.
The Australian Law Reform Commission, in its report on the Trade Practices Act, supported the introduction of an integrated statutory scheme mirrored in State and Territory legislation. However, because the Commission believed that an integrated scheme would take some time to develop, it recommended that the post-sale consumer protection provisions of the Trade Practices Act be amended to include a right to seek replacement for faulty goods or services.
The Government will introduce legislation to give effect to a new post-sale consumer protection regime in the next twelve months. The Government will be working with State and Territory governments to encourage the adoption of identical post-sale provisions in State and Territory law to those adopted by the Commonwealth.The proposal currently being considered would extend rights to subsequent owners, offer remedies of repair, replacement or refund, and provide consumers with rights to take action against suppliers or manufacturers.
In many cases, these schemes consider disputes that would not warrant the expense of litigation, even if a customer could afford it. A key feature of their operation is that, upon receipt of a complaint, the body entrusted with addressing the complaint examines whether it is justified and attempts to seek redress through a process of reconciliation or mediation. It is a non-threatening way of bringing customers and service providers together.
Both service providers and customers benefit from customer dispute schemes. They are faster and less complex than courts and vastly improve the public perception of the service providers involved. Moreover, they often improve customer/service provider relations and can help in identifying systemic organisational problems.
Customer dispute schemes vary in how they are set up. The insurance schemes, for example, comprise a panel with an independent chair and consumer and industry representatives, who consider disputes with companies. In contrast, the banking and telecommunications industries have established industry ombudsman schemes. These comprise a board of directors, a council with an independent chair and consumer and industry representatives, and an Ombudsman with responsibility for the day-to-day operation of the scheme. Most schemes have independent secretariats to assist them. These secretariats are not employed by industry but by the schemes themselves.
The Government agrees with the Access to Justice Report, which recommended that standards be established for consumer dispute schemes. That report identified four main areas which the standards should cover:
After consultation with industry and consumer groups, the Commonwealth will set minimum standards for customer dispute schemes.The standards will be of value to all industries seeking to establish complaints handling and dispute resolution schemes. The setting of such standards will provide a means of making sure that these schemes are independent, accountable, and have full public confidence. Effective complaints handling will reduce the number of disputes that currently need to be resolved by small claims and other courts.
Part of this trend towards industry-based complaint mechanisms has been an increased tendency for such mechanisms to style themselves as `ombudsman' schemes. Historically, the term `ombudsman' has been associated with specific criteria related to independence and impartiality. There has been a degree of concern expressed in recent years about the proliferation of the use of the term in circumstances where these criteria may not apply.
The continued adoption of the title `ombudsman' by a broad range of bodies with widely different functions and operating procedures could, in the long term, devalue the public credibility and standing of Ombudsmen's offices.
As part of the process of developing minimum complaints standards for the industry schemes, the Commonwealth Ombudsman will develop an appropriate mechanism for the protection of the name `ombudsman'.
Elsewhere in this Statement, there is more detail about the measures proposed to improve the protection for consumers in their dealings with lawyers.[1] In summary, these measures include:
The Government will provide $2 million over four years to improve the targeting of the Australian Securities Commission's activities and expand community access to, and satisfaction with, the Commission's enforcement activities.
While it would not be practical for the Commission to conduct investigations into all complaints, the Government is keen for the Commission to play a role in consumer protection across the spectrum of the market. It should become better placed to respond to the needs of customers and creditors of smaller organisations.
The Australian Securities Commission already analyses the source and nature of the complaints it receives, taking into account the type of offences disclosed, the industries affected and the sums of money involved. The Commission recognises, however, that it is necessary to bring a greater sophistication to the analysis undertaken so far.
The Australian Securities Commission will undertake a project to analyse all complaints it receives to determine which additional matters should be investigated.The highlighting of trends in alleged corporate misconduct will enable the Commission to better target its activities. The Commission's analysis will also help to identify those matters that are of importance to the small business community or the small investor.
The Australian Securities Commission will conduct an education program designed to inform company directors of their responsibilities under the law and the risks faced by directors of small companies which are mismanaged.Small business will be a particular focus of the program. Insolvent trading is one area of specific concern on which education programs will focus. Through greater awareness of the consequences of insolvent trading, honesty and fairness in the management of small corporations will be promoted. It is also hoped that through increased knowledge of the Corporations Law, small businesses themselves will be more alert to the danger signs for when other small businesses, with whom they are dealing, may be on the brink of insolvency. The content of education programs will be developed in consultation with small business corporations.
In conjunction with Australia's professional accounting bodies, the Australian Securities Commission has already published a brochure about directors' duties. This has been endorsed by the Australian Institute of Company Directors. The Commission believes that the proposed education program will build on this initiative and on the other educative work it already undertakes.
A quick response is also an important part of access to justice. The Commission has been investigating ways to make its resources more readily available to the public.
A pilot community hotline will be established providing free advice in relation to alleged breaches of the Corporations Law.This service will be promoted to smaller companies and their employees, shareholders and trade creditors. It will help those who may be inhibited from making a complaint in writing. It will also allow for the provision of advice on the Corporations Law and serve to identify more quickly matters which need to be addressed. In situations where the Commission has no jurisdiction, or is otherwise unable to deal with a matter, contact with other support or regulatory agencies will be arranged.
These initiatives will provide consumers with increased knowledge of their rights in their dealings with providers of goods and services. Remedies will be accessible and affordable for individuals, regardless of where they live.