Uniform consumer protection laws announced

The national Ministerial Council on Consumer Affairs has announced in-principle but detailed agreement for a consistent national consumer protection law.

The Council is made up of Federal and State Ministers responsible for consumer affairs and describes the changes – expected to be fully in place by 2011 – as ‘far-reaching consumer policy reform’.

Highlights of the announcement

Consistency

• Designed to provide greater national consistency in Australia’s consumer laws.
• Will overcome existing inconsistencies, gaps and duplication in Australia’s consumer legislation and its enforcement.

Objectives

• Will adopt Productivity Commission’s proposed objective:

To improve consumer wellbeing through consumer empowerment and protection, fostering effective competition and enabling the confident participation of consumers in markets in which both consumers and suppliers trade fairly.

• 6 key targets:
  • to ensure that consumers are sufficiently well-informed to benefit from and stimulate effective competition;
  • to ensure that goods and services are safe and fit for the purposes for which they were sold;
  • to prevent practices that are unfair;
  • to meet the needs of those consumers who are most vulnerable or are at the greatest disadvantage;
  • to provide accessible and timely redress where consumer detriment has occurred; and
  • to promote proportionate, risk-based enforcement.

Reducing the costs to business

• Reduce burdens on business and facilitate well-functioning markets.

Basis of laws

• Law should be based on the current consumer protection provisions of the Trade Practices Act 1974 and also incorporate appropriate amendments reflecting best practice in state and territory legislation.
• Developed by the agreement of all Australian governments and made law through an application legislation scheme, with the Commonwealth as the lead legislator.
• Amendments to be agreed by governments according to an Inter-Governmental Agreement, which will provide for the amendments to be agreed by the Commonwealth plus four state and territory governments, of which three must be states.

Unfair contract terms

• Will include a provision that addresses unfair contract terms with the following features:
  • Term is unfair when it causes a significant imbalance in the parties’ rights and obligations arising under the contract and it is not reasonably necessary to protect the legitimate interests of the supplier.
  • Remedy could only be applied where the claimant shows financial or other detriment, or a substantial likelihood of detriment, to the consumer (individually or as a class).
  • Would relate only to standard form (ie non-negotiated) contracts.
  • Would exclude the upfront price of the good or service.
  • Would require all of the circumstances of the contract to be considered, taking into account the broader interests of consumers, as well as the particular consumers affected.
• Provision for class actions against suppliers.
• Provision for certain (types of) terms to be outlawed.
• Business to be allowed a grace period to comply.

Our take on it

The present mish-mash of State and Federal consumer laws is a disgrace, and a move for consistency is to be applauded.

That doesn’t mean that consistency will always yield a fair or balanced law.  Business is on notice that the rules of the game will be significantly revamped over the next three years, and needs to be ready to present its perspective in the national discussion.