Review of government protection of consumers

By Graeme Samuel, chairman of the Australian Competition and Consumer Commission

A comprehensive review of Australia's consumer policy framework is taking place this year and provides a good opportunity for reflection and some fine tuning of the way governments protect consumers.

The review, conducted by the Productivity Commission, is the first substantial examination of the current regime since 1984 and will report on ways to improve links between jurisdictions and address inconsistency and unnecessary duplication of regulation.

Australia’s consumer policies are generally regarded as extremely effective, due in no small part to their legislative basis – the Trade Practices Act.

Since its inception in 1974, the Act’s flexibility and broad approach to a range of consumer rights issues has allowed it to adapt and it has been well suited to its task. However, after more than three decades many of the issues facing today’s consumers are vastly different to what they were in the past and require governments and protection agencies like the Australian Competition and Consumer Commission (ACCC) to keep up with changing issues.

The ACCC recently outlined its views on ways to improve Australia’s consumer policy framework, and those views will be followed up with a formal submission to the Productivity Commission.

The ACCC believes that the current system continues to serve the country well, and there is no need for comprehensive change. However, there are a number of areas that do need to be addressed if our system is to continue serving consumers well.

Firstly, Australia’s decentralised approach to consumer protection has many benefits, but it has also led to some inconsistencies between fair trading laws in different parts of the country.

Those inconsistencies appear to be increasing and are confusing to businesses operating in a number of jurisdictions. They also lead to a number of hidden costs to businesses which would be better served by a more uniform set of regulations.

In addition, the complexity and lack of uniformity makes it increasingly difficult for consumers to clearly understand their rights.

Secondly, there is a strong need for civil pecuniary penalties. Currently, penalties for wrongdoing can only be obtained through criminal proceedings. While the ACCC is committed to taking criminal actions where it is warranted, criminal actions are slow and require significant resources, which may be overkill in some circumstances. The ability to obtain civil pecuniary penalties, declarations, injunctive relief, and other measures such as corrective advertising within a single action would allow the ACCC to respond more quickly and effectively, while also providing an increased deterrent.

Thirdly is the issue of allowing the ACCC to seek redress on behalf of a large group of consumers.

Currently, the ACCC can only obtain consumer redress for victims who provide written consent. In cases involving large numbers of consumers over a broad geographic region it can be extremely difficult and prohibitively expensive to locate and obtain written consent from thousands of people who may have been affected by a scam or other dishonest activity.

These suggested changes to the current regime would remove much of the ambiguity and duplication that has developed over time. Importantly, they would also remove some of the frustrating hurdles faced by the regulator, therefore allowing the ACCC to protect consumers and enforce the law more effectively. Enhancing the consumer policy framework provides the opportunity to empower consumers by making the law easier to understand.

Armed with an enhanced set of tools potentially flowing from the review, all levels of government from fair trading agencies through to the ACCC will be able to continue building on the strong foundations of an effective and respected consumer protection regime.

The result will be a bigger set of teeth for the watchdog and a better deal for all Australians.

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