On 19 April 2017 Consumer Affairs Australia New Zealand tabled its report to the Federal Government of its review of the Australian Consumer Law (ACL). The review of the Australian Consumer Law (ACL Review) made a number of wide-ranging recommendations that will have an impact on how Dealers manage complaints concerning vehicle defects. The ACL Review also considered a report by the Productivity Commission concerning the administration and enforcement of ACL complaints.
The purpose of the ACL Review was to assess the effectiveness of the ACL (including its administration and enforcement) in establishing and making accessible a common set of consumer protection rights and obligations.
The recommended changes include amending and expanding the existing consumer guarantees in favour of consumers. Many of the recommended changes will likely have a significant impact on new motor vehicle Dealers. These include:
- amending the consumer guarantees to specify that where a good fails to meet a guarantee within a short, specified period of time, a consumer be entitled to a refund or replacement without needing to prove a ‘major failure’. (For example, similar legislation in the UK specifies a 30-day refund entitlement where goods fail to meet certain standards.)
- clarifying that multiple minor failures can now accumulate to amount to a major failure (whether or not those minor failures relate to the same or different issues)
- imposing additional requirements relating to extended warranties – including additional disclosure requirements such as a comparison to ACL rights and a 10-day cooling-off period (which becomes an unlimited cooling-off period if the disclosure obligations are not met)
- adding additional guidance for what ‘reasonable durability’ and ‘unsafe’ means in the context of consumer guarantees
- expanding consumer guarantees so that they apply to all online auction sales
- requiring any additional fees and charges to be included in the headline price for online sales
- reducing the evidentiary burden on consumers to prove claims for breaches of the consumer guarantees
- increasing maximum financial penalties for breaches of the ACL, and
- extending the ACL prohibitions on unconscionable conduct to apply to publicly listed companies.
In addition to the amendments to the consumer guarantees, the ACL Review also considered a detailed report by the Productivity Commission regarding how the ACL is administered and enforced, and the role regulators play in making the law accessible and effective for consumers.
In its report the Productivity Commission recommends the Government consider expanding the powers of regulators to compel businesses (including motor vehicle Dealers) to participate in alternative dispute resolution such as mediation (without the need for legal proceedings to be on foot).
The ability to actually compel (not just encourage) businesses to participate in alternative dispute resolution processes, without there being a legal proceeding on foot, would represent a significant shift from the current regulatory and enforcement environment.
Among other issues cited in its report the Productivity Commission considered that:
- the Government should consider implementing a public register of consumer complaints (subject to appropriate vetting)
- the Government should consider streamlining the differences in administration and enforcement of the Australian Consumer Law between the various State jurisdictions. A specific example of an issue in this area was the different State jurisdictional limits, which prevented consumers in certain States from commencing low cost legal proceedings in relation to motor vehicles
- there should be additional Government funding for consumer advocacy groups
- maximum financial penalties available under the ACL are too small, and
- the Government should consider expanding all ACL regulators’ powers to issue infringement notices to deal with a range of minor offences in a cost-effective manner.
In preparing its report the Productivity Commission considered submissions that included calls for industry-specific retail ombudsmen to assist consumers resolve disputes under the ACL.
While the Productivity Commission has not made any recommendation for the appointment of an industry-specific ombudsman for the new motor vehicle retail industry, it has recommended that the Government consider expanding the powers of the ACL regulators where there is no industry-specific ombudsman (such as in the retail new motor vehicle industry).
The ACL Review’s recommendations, including those of the Productivity Commission, outline a reform package for the Consumer Affairs Ministers of the Commonwealth, States and Territories to consider and implement.
According to the ACL Review report, Commonwealth, State and Territory Consumer Affairs Ministers will meet in late 2017 to decide on what proposed reforms should be recommended to the
Council of Australian Governments Legislative and Governance Forum on Consumer Affairs (CAF). Once CAF has then agreed to the recommended reforms, they will be put to Parliament as a reform package for implementation. No estimated timeframe has been given for this to occur.
A further review of the ACL has been recommended to be conducted in 2021, which suggests that the proposed reforms will be enacted before that time.
This article was written by Evan Stents – Lead Partner, and Christian Teese – Senior Associate, Automotive Industry Group | HWL Ebsworth Lawyers
Lead Partner, Automotive Industry Group, HWL Ebsworth Lawyers