Inquiry into Australias Consumer Policy Framework

1
Inquiry into Australias Consumer Policy
Framework

• Robert Fitzgerald AMCommissionerProductivity
  Commission
• National Consumer Congress
• PERTH
• March 2008

2
Inquiry Challenges

• Inquiry into Australias Consumer Policy
  Framework
• Not a Law Reform inquiry
• Terms of reference extensive- need to avoid
  unnecessary increases in regulation and cost
  burdens on governments, business and consumers
• Community Wellbeing- economy wide approach- net
  benefits from reforms

3
Changing Environment

• ? Product complexity and product choice -
  standard form contracts, .
  bundling, intermediaries
• ? Global competitive market place
• ? E commerce, technological change and product
  and service convergence
• ? Behavioural Economics, higher consumer
  expectations and increasing . . number
  of vulnerable consumers
• AND
• Pressure to rationalise and remove ineffective
  regulation and reduce cost . burdens

4
Strengths of current arrangements

• TPA and FTAs have provided a broad and reasonable
  platform for consumer protection
• Does not rely solely on black letter law--- self
  and non regulatory approaches --- recognises
  market dynamics
• Regulators generally take a conscientious and
  reasonable approach to enforcement
• Delivers reasonable levels of consumer wellbeing
  compared to international experiences
• But is it good enough for the future ?

5
Weaknesses in current arrangements

• Regulatory complexity and variation without
  offsetting benefits
• Unnecessary specific industry regulation
• Lack of timely responsiveness to emerging needs
• Perverse outcomes for consumers
• Incomprehensible information disclosure
• Complex redress mechanisms
• Insufficient research, individual consumer and
  systemic advocacy

6
Opening the door

• A genuinely national consumer policy framework---
  leading to an integrated national commercial
  framework for corporate, competition and consumer
  policy
• Effective competition needs confident and
  informed consumers, and be based on fair trading
  and good faith
• A formal recognition of behavioural
  characteristics in decision making on consumer
  policies
• A recognition of the need to address unfairness
  in contracts that cause consumer detriment
• An enhanced role for research, individual and
  systemic advocacy

7
Must haves.the starting point

• A common and agreed set of objectives to help
  shape policy considerations and regulatory
  interventions national
• A common and agreed approach to decision making
  including consideration of market conditions,
  information failures, consumer characteristics
  (including vulnerablility) and community
  expectations
• A genuine regard to a net benefit approach in
  assessing the most appropriate response

8
Must havesthe foundation stone

• A single national generic consumer law not based
  on the lowest or highest common denominator. But
  one that is efficient and effective in meeting
  todays and tomorrows needs.
• The TPA, subject to amendments, provides such a
  foundation

9
Institutional improvements needed

• Transfer of consumer credit and
  licensing/registration of financial
  intermediaries to Commonwealth.enforcement by
  ASIC
• Transfer of generic consumer product safety
  regulation to Commonwealth.enforcement by ACCC
• Examination of barriers and impediments to a
  transfer of responsibility of generic consumer
  law enforcement
• Enhancing the efficiency and effectiveness of
  Ministerial Council arrangements to meet
  increasingly changing demands. requiring more
  timely and consistent responses

10
Rationalising Industry Specific Law

• Identify and repeal unnecessary or overly
  burdensome industry specific regulation
• A single consumer protection regime for energy
  services
• A revamping of Home Builders Warranty insurance
• Amend uniform consumer credit regulation and
  introduce national regulation for financial
  intermediaries

11
Unfair practices and contracts

• A general unfairness provision not yet necessary
  in Australia.
• Unconscionability provisions not meeting
  expectations
• A case for unfair contract terms regulation.
  tightly constrained. cover both private and
  representative actions

12
Enhancing effective consumer knowledge

• Greater consideration of what disclosure can and
  can not achieve
• Move from protecting firms to informing consumers
• Layering.referencing
• Comprehensibility in disclosure
• Testing on consumers
• Implied warranties. Greater education and
  enforcement

13
Effective enforcement

• Consistent
• Proportionate
• Risk Based
• Additional enforcement tools
• ? civil pecuniary penalties
• ? substantiation requirements
• ? banning orders after breach proven
• ? infringement notices

14
Accessible redress

• Ombudsman schemes
• Tribunals
• Enhanced Individual advocacy
• Representative Actions

15
General

• Enhanced research agenda and funding
• Systemic advocacy supported through national peak
• Improved funding for legal support and financial
  counselling

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More information?

• Our publications and other information can be
  accessed at
• www.pc.gov.au