'Improving the effectiveness of the consumer guarantee and supplier indemnification provisions under the Australian Consumer Law', a Regulatory Impact Statement (RIS) released today by the Treasury Department on behalf of Consumer Senior Officials (formerly Consumer Affairs Australia and New Zealand (CAANZ)), reflects recognition of 'ongoing difficulties for consumers seeking remedies for goods that fail to meet the consumer guarantees'.
Ministers requested a regulatory impact assessment be undertaken regarding
• options to ensure businesses comply with the consumer guarantees and consumers can access the remedies to which they are entitled. This includes consideration of a proposed civil prohibition for failure to provide a consumer guarantees remedy and
• options to prohibit manufacturers from failing to indemnify suppliers and prohibit retribution by manufacturers against suppliers who seek indemnification.
Ministers agreed to consider the costs and benefits of applying those options in two ways: across all sectors of the economy and to new motor vehicles only.
The document states
A Consultation RIS presumes there may be scope for the Government to take action to address identified problems. The purpose of this Consultation RIS, therefore, is to canvass the regulatory options under consideration, to determine the relative costs and benefits of those options. The costs and benefits of each option set out in this Consultation RIS are assessed individually. In assessing the potential costs and benefits of each option, this Consultation RIS includes indicative costings. This analysis is provided to inform the consultation process and to help compare the possible net benefit to the economy of each option in quantitative terms. However, costs and benefits will fall unevenly across suppliers, manufacturers, and consumers. The assumptions used to calculate the indicative cost benefit analysis are at Appendix A – Assumptions. Feedback received through consultation on this Consultation RIS will help to refine this analysis and inform the Decision RIS.
Key questions in the document are -
Part A: Receiving remedies
1. Please provide any relevant information or data you have to help estimate the extent to which consumers are unable to access consumer guarantee remedies when entitled?
2. Do you have any information on consumers claiming refunds for new motor vehicles? If so, please provide details on how long after purchase refunds are requested, and the prevalence of such requests.
3. Do you have any information or data to support the view consumers are ‘gaming’ the system to obtain replacement new motor vehicles or refunds?
4. Do you consider it appropriate for factors such as a depreciation deduction (a reduction in the value of a refund for usage) to be considered relevant in determining a refund amount? In what circumstances do you consider this would be appropriate? How would a reduction work? How should post-purchase increases in value be factored in? Please detail reasons for your position.
5. For new motor dealer representatives, please provide any relevant information or data on how providing remedies has impacted your business.
6. Are there any other benefits associated with maintaining the status quo?
7. If the status quo was maintained, what other potential costs could there be to industry, consumers and businesses?
8. What do you consider would be an appropriate maximum penalty for a supplier or manufacturer failing to provide a remedy for a failure to comply with a consumer guarantee when required under the ACL? Please detail reasons for your position.
9. What do you consider would be an appropriate infringement notice amount for an alleged contravention of a requirement to provide a remedy for a failure to comply with a consumer guarantee? Please detail reasons for your position.
10. What would be the most effective way of implementing a civil prohibition for a failure to provide a consumer guarantee remedy? Should the circumstances in which a penalty applies be limited in any way?
For consumers:
11. Have you experienced issues with a trader not agreeing to provide your requested remedy for a major failure? If yes, please provide details. For example, what were the circumstances, including the types of goods or services involved, the nature of the problems experienced with the goods or services, and how the trader dealt with your issue?
12. If you have experienced issues where a trader has offered to repair, rather than refund or replace a good with a major failure: a. What direct financial costs did you incur during the period the good was being repaired (for example, visiting the retailer, taking the matter to a court or tribunal, or hiring a replacement for the good)? b. How much time did you spend dropping off the good for repair, collecting the repaired good and/or negotiating with the trader? c. Have you had different experiences with lower value goods (for example, toaster, kettle) than with higher value goods (for example, a white good or motor vehicles)?
For businesses:
13. Are there any unintended consequences, risks or challenges that need to be considered with creating such civil prohibitions?
For everyone:
14. Do you think introducing a civil prohibition would deter businesses from failing to provide the applicable consumer guarantee remedy to consumers who are entitled to one?
15. Please provide any relevant information or data on whether non-compliance with the consumer guarantees is a significant problem in the new motor vehicle sector compared to other sectors?
Part B: Supplier indemnification
Suppliers:
16. to what extent are you able to enforce your indemnification rights?
17. What are the barriers to seeking indemnification?
18. Has your business been subject to retribution when you have sought indemnification? If yes, what form did it take?
19. Please provide any relevant information or data you have that quantifies the extent of manufacturers not indemnifying suppliers, or making it difficult for suppliers to obtain indemnification?
20. Please provide any relevant information or data you have that quantifies the proportion of suppliers that do not seek indemnification?
21. Please provide any relevant information or data you have that quantifies the proportion of consumer claims that suppliers refuse or do not consider due to the inability or difficulty in obtaining indemnification, or due to fear of retribution?
For suppliers:
22. Have you sought indemnification from manufacturers under the existing law? If not, please provide details.
23. Have you experienced difficulties getting indemnified from manufacturers? If so, please provide details.
24. Would your inclination to seek an indemnification change if a civil prohibition was introduced?
25. Would your approach to providing consumer guarantee remedies to consumers change if a civil prohibition was introduced? If so, how?
For manufacturers:
26. How (if at all) would a civil prohibition change your response to requests for indemnification?
27. What other issues might a civil prohibition create?
For retailers:
28. Have you experienced retribution from a manufacturer after seeking indemnification? If so, please provide details.
29. Would your inclination to seek indemnification change if a civil prohibition on retaliation was introduced?
30. Would your approach to providing consumer guarantees remedies to consumers change if a civil prohibition on retribution was introduced? If so, how?
For manufacturers:
31. How (if at all) would a civil prohibition on retribution change your response to requests for indemnification?
For everyone:
32. If a civil prohibition was created to address manufacturer retribution: a. what form should it take? (e.g. effective models in other laws) b. should presumptive tests apply? If so, what presumptions should be included?
33. What penalties or sanctions should be available to deter or compensate for retribution?
