Report urges consumer law shake-up and red tape reductions

Business could find it easier to comply with consumer protection laws, but face tougher penalties for any breach under the recommendations of an authoritative new report released today.

The Productivity Commission report urges a massive shake-up of Australia’s consumer law framework, recommending:

• Abolition of the state-based regime, based around Fair Trading Acts in each state, and introduction of consistent national laws.
• Introduction of laws prohibiting unfair consumer contracts.
• National regulation of finance brokers and other credit providers.
• Greater resources for the enforcement of consumer laws and a wider range of penalties including civil financial penalties, banning orders and on-the-spot fines.

For business, the report has elements of both carrot and stick. While a national framework for laws in areas such as product safety and misleading and fair trading could result in lower compliance costs for manufacturers and retailers, new penalties will force businesses to be on their toes.

The introduction of a new prohibition on unfair contracts would affect businesses in the mobile phone, product and car rental and consumer credit space by banning standard contract clauses that unfairly prejudice consumers, although those in Victoria already deal with a similar regime.

Finance brokers could face a new level of regulation, including the introduction of a national licensing regime.

And hefty new penalties could be put in place to support the new regime, including banning orders that could see repeat offenders prohibited from establishing new businesses.

Business groups this morning welcomed the report, particularly the plan for a comprehensive national scheme of consumer laws.

Greg Evans, industry policy and economics director with the Australian Chamber of Commerce and Industry, says the move to a national regulation framework would benefit business with less red-tape.

“Many Australian businesses don’t operate in one state, they operate across states and it can lead to significant compliance savings if only one regime applies,” Evans says.

Australian Retailers Association executive director Richard Evans says he hopes moves towards national consumer laws will trigger a more comprehensive program of red-tape rationalisation.

“This is the first step in standarising a lot of state laws that impact on retailing such as in retail leasing and consumer safety, but there are myriad other areas that could be standardised,” Evans says “We welcome this change and encourage the Federal Government to continue to pursue this line of thinking.”

The key question now is the extent to which the Government will adopt the report’s recommendations. Competition Policy and Consumer Affairs Minister Chris Bowen says the report is “valuable” and will be given careful consideration.

“The development of truly national markets means that Australian consumers should expect to be treated in the same way, regardless of where they live,” Bowen says.

A lot will depend on the attitude of the state governments, however, as their agreement required to get many of the report’s recommendations off the ground.