Consultation on Exposure Draft on Australian Consumer Law (ACL) Amendments

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The Government recently released an exposure draft of a Bill (the draft Bill) capturing many of the recommendations of 2017’s Australian Consumer Law (ACL) Review (https://treasury.gov.au/consultation/t257313).

Today we look at the key proposals contained in the draft Bill and point out how where they differ from the recommendations that resulted from the review.

Australian Consumer Law
Photo by Luke Palmer on Unsplash
By Dr Drew Donnelly, Compliance Quarter.

Background

In mid-2015 the Commonwealth, State and Territory Consumer Affairs Ministers (Joint Ministers) asked Consumer Affairs Australia and New Zealand to initiate a broad-reaching review of the Australian Consumer Law (ACL), the ‘ACL Review’. As well as generally looking at whether the Australian Consumer Law was still fit-for-purpose, the Australian Consumer Law Review looked at where it would be appropriate to increase consistency between provisions in the ACL and the Australian Securities & Investments Commission (ASIC) Act 2001.

After extensive consultation, the Australian Consumer Law Review Final Report was released in April 2017, and in August 2018 Joint Ministers recommended legislating a range of proposals that came out of theAustralian Consumer Law Review (see http://consumerlaw.gov.au/communiques/meeting-9-2/). On the basis of those recommendations and other considerations, the Commonwealth Government developed the draft Bill.

The draft Bill

Amendments to the Australian Consumer Law in the draft Bill are set out below.

  • Evidentiary burden. Expanded ‘follow-on’ provisions will allow private individuals to rely on admitted facts from early court proceedings (such as proceedings brought by the Australian Competition and Consumer Commission (ACCC));
  • Unconscionable conduct. The prohibition on unconscionable conduct against a person is extended to include where that person is a publicly listed company;
  • Unsolicited consumer agreements. Section 69 of the Act will be altered to make it clear that an unsolicited consumer agreement can include situations where a dealer meets a consumer away from business premises (for example, in a public place).
  • Pre-selected options in online booking. Fees or charges associated with pre-selected options (e.g. carbon offsets when purchasing flights) must be included in the single price.
  • Product Recall. A definition for ‘recall’ is included in the Australian Consumer Law to specify when notification obligations are met.
  • Product safety information. The ACCC can request information about unsafe products from third parties, as well as the supplier.
  • Unfair contract terms. ACCC and ASIC will be able to investigate unfair contract terms.
  • Penalties and Remedies. Remedies extended to give the court the power to require the person in contravention of the ACL to engage a third party to perform the required community service.
  • Consumer Guarantees. The exemption from consumer guarantees for the transport or storage of goods is clarified so that it only applies where both the consignor and consignee are a business, not where the consignee is a consumer.
  • Financial products. Consumer protections are clarified to make it clear that they apply to financial products, not just financial services.
  • Technical amendments. Amendments are made to the definition of unsolicited services and the definition of ‘supply or possible supply’ of a financial product.

Notable omissions

The proposals in the draft Bill largely mirror the matters identified for immediate amendment by the Joint Ministers. However, there are a couple of areas where the Bill does not incorporate those recommendations. Specifically:

  • Warranties against defects. Joint Ministers recommended clarifying the requirements for warranties against defects by developing text relating specifically to services and services bundled with goods.
  • Maximum Penalties. Joint Ministers had recommended an increase to maximum financial penalties available under the ACL by aligning them with penalties relating to competition provisions of the Competition and Consumer Act 2010:

It is worth keeping in mind that the recommendations of Joint Ministers contained on this Bill were recommended on the basis that they would have a minor regulatory impact and did not need a full regulatory impact analysis. In light of this, it may be that the Commonwealth Government has decided that the proposals recommended by Joint Ministers, not contained in the bill (particularly with regards penalties) are in need of further consideration.

Consultation on the draft Bill ends on 28 February 2018. You may send your submissions to consumerlaw@treasury.gov.au.

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