On 1 January 2011 the Trade Practices Act 1974 (TPA) changed its name to the Competition and Consumer Act 2010 (CCA) which incorporates the new Australian Consumer Law (the new law).
What is it?
The new law is a unified national consumer law aimed at ensuring consistency in the rights of consumers and obligations of businesses across Australia.
It is administered by the Australian Competition and Consumer Commission (ACCC); each State and Territory's consumer agency; and in respect of financial services, the Australian Securities and Investments Commission (ASIC).
What's new?
The Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 (Cth) was the first part of the new law which introduced:
1.New enforcement powers for the ACCC
The ACCC and ASIC have an increased range of enforcement options
for consumer protection such as the ability to issue the following
notices or orders in contravention of certain CCA provisions:
- infringement notices that contain a monetary penalty;
- disqualification orders which prevent an individual from managing a corporation for a period of time;
- substantiation notices seeking additional information where a person is suspected of making a false representation in promoting goods or services in trade or commerce.
- public warning notices where suspected contravention concerns 'public interests' or there has been refusal or failure to respond to a substantiation notice;
- orders to redress loss or damage suffered by non-party consumers which warrants a refund or contract variations.
2. New civil pecuniary penalties
Where it can be proven on the balance of probabilities, the ACCC
and ASIC can impose monetary penalties for various contraventions
of the new law of up to $1.1 million against corporations and
$220,000 against individuals. Note that it does not apply to
misleading or deceptive conduct.
3. New unfair contracts regime
The new regime applies to standard form contracts that are entered
into on or after 1 July 2010. In relation to existing
contracts, the changes will impact on terms that are renewed or
varied on or after that date.
The second part of the new law, the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) essentially replaced Parts IVA, V, VA and VC of TPA, and introduced the following:
- Sales / unfair practices law
The new law harmonises the existing laws from all states and territories in relation to unsolicited supply of goods and services; pyramid selling; referral selling; and, component pricing. It also inserts additional provisions on multiple pricing; lay-by agreements; proof of transaction and unsolicited consumer agreements.
The new law regulates businesses when approaching consumers during unsolicited sales and the content and formation of unsolicited consumer agreements. The new law also requires a written agreement to be provided to consumers which discloses basic information, including cooling off periods, termination rights and the total price of the sale. It covers door-to-door selling, telephone sales and other forms of direct selling which do not take place in a retail context. - Consumer guarantees reforms
The new law imposes substantially the same consumer guarantees law under TPA but made the right of action in seeking remedies statutory so that it cannot be excluded in the contract.
The appropriate remedy will depend on the guarantee breached and the nature of the breach. Significantly, the ACCC can take representative action for redress on behalf of consumers (with written consent of consumers). - Product safety legislative regime
The new law imposes a national approach to mandatory safety standards, safety interim or permanent bans, mandatory or voluntary product recalls, and mandatory reporting and notification requirements on goods or product related services. The concept of reasonable foreseeable use or misuse is applied in the approach.
Reference / Review
ASIC has released a specific consultation paper (CP135 June 2010) for the benefit of financial institutions in relation to unfair contract terms in the context of mortgage early exit fees.
A media ready reckoner on the ACL changes is available on the ACCC media centre here
This article reflects the ACL as on 13 January 2011.
For more information, please contact:
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Sydney |
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John Dalzell |
t (02) 9931 4755 |
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Perth |
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Andrew Mason |
t (08) 9323 0999 |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.