On 1 January 2011, mandatory reporting requirements came into effect under the product safety provisions of the Australian Consumer Law. How broadly these reporting requirements are to be interpreted has been the source of much confusion in the consumer goods industry. On 16 August 2011, the ACCC released statistics regarding the number of reports it had received and the number of recalls that the reporting requirements had triggered in the first half of 2011. These statistics provide a useful insight into both how the industry is interpreting the mandatory reporting provisions, as well as the level of product recall triggered by mandatory reporting requirements to date.
The mandatory reporting provisions of the Australian Consumer Law require suppliers of consumer goods and product related services (such as installation services), to notify the ACCC within 48 hours of any death, serious injury or illness that has been caused, or may have been caused, by the use or foreseeable misuse of a consumer good, or product related service.
The ACL states that:
"serious injury or illness" means an acute physical injury or illness that requires medical or surgical treatment by, or under the supervision of, a medical practitioner or a nurse (whether or not in a hospital, clinic or similar place), but does not include:
- an ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development); or
- the recurrence, or aggravation, of such an ailment, disorder, defect or morbid condition.
The ACCC's Guide to the Mandatory Reporting Law with respect to Consumer Goods (the Guidelines) issued in December 2010 provides some guidance as to what the ACCC considers constitutes a "serious illness or injury".
The ACCC has created a distinction in its Guidelines between "chronic ailments" and "pre-existing sensitivities". The Guidelines indicate that a long term exposure to a substance in a consumer good that causes a chronic disease, such as cancer, is not reportable. However, if a consumer good causes a death or acute injury or illness requiring medical treatment of a person with a pre-existing sensitivity, then this is reportable. For example, if a person with a pre-existing allergy to a substance suffers an anaphylactic reaction after contact with a consumer good containing that substance, a report to the ACCC will be required.
The ACCC's Guidelines indicate that a serious injury or illness can include:
- an external physical injury, such as a serious burn, deep cut, broken bone, choking or serious fracture;
- an internal injury, such as internal bleeding;
- an acute illness, such as poisoning;
- a severe allergic reaction, such as anaphylaxis or contact dermatitis.
The Guidelines indicate that injury or illnesses requiring treatment from health professionals other than medical practitioners or nurses do not satisfy the definition of "serious injury or illness". A broken tooth requiring treatment by a dentist, for example, does not require a report to the ACCC.
Similarly, the ACCC's Guidelines indicate that a "near-miss" does not require a mandatory report. For example, a house fire caused by a consumer good but in which no one was harmed, is not reportable to the ACCC. "Near-misses" involving consumer goods can be voluntarily reported to the ACCC via the Product Safety Australia website (www.productsafety.gov.au) but these are not classified as mandatory reports.
Reporting an incident under the Australian Consumer Law is not an admission of liability. However, failure to notify in accordance with the requirements of the provisions is a criminal offence, punishable by a penalty of $16,500 for a body corporate and $3,300 for persons other than a body corporate.
ACCC statistics regarding the mandatory reporting levels
In the first six months of 2011, a total of 911 mandatory reports were received by the ACCC. Of the 911 confidential reports received in the first half of this year, 481 were or are currently being assessed by the ACCC and 430 were referred to other regulators.
The high levels of reporting in the first six months of the year suggest that businesses have tended to err on the side of caution when interpreting their reporting requirements under the regime and have taken an active approach to reporting. In our view, businesses have taken this cautious approach to their reporting requirements in light of the fact that reporting is not an admission of liability, while failure to report an incident under the regime is a criminal offence.
Recall levels low compared to number of incidents reported
As noted in the Guidelines, once a mandatory report has been provided to the ACCC, the ACCC reviews it as soon as practicable after receipt. Reports of deaths will be processed with priority over reports of injury or illness.
In the first instance the ACCC will investigate the cause of the incident and determine whether there is a need for further action to be taken. The ACCC will seek to establish whether the incident was directly caused by the product and whether the problem arose because of a design or manufacturing fault in the product. The ACCC will ask the supplier to provide its view of why the incident occurred. The ACCC will take the supplier's investigations and analyses into account, as well as any other relevant information, before deciding what action may be required.
Depending on the specific nature of the incident, and the nature of the risk to other consumers, a mandatory report may result in:
- no immediate further action;
- the voluntary or compulsory recall of the product;
- non-regulatory action, such as education or a warning;
- regulatory action establishing a ban or mandatory standard;
- enforcement action if regulations have been breached; or
- a detailed hazard assessment project.
The ACCC's statistics issued on 16 August 2011 indicate that the intelligence provided by mandatory reports and the ACCC's product safety data clearinghouse triggered 40 recalls during the first six months of 2011. The ACCC indicated that recalled products were associated with anaphylactic and allergic reactions, burns, electrocution, choking hazards, cuts and lacerations.
Small to medium size business are less active reporters
The ACCC has indicated that to date, reporting levels have not been the same across all business sizes. The ACCC has indicated that the majority of reports in the first six months have come from large organisations. The ACCC's Deputy Chairman, Peter Kell has said, "As the majority of these reports have come from large organisations, the ACCC is concerned that small and medium sized enterprises may not yet be fulfilling their mandatory requirements."
Mr Kell went on to say, "It's important for suppliers to remember that the law makes it clear that a mandatory report is not an admission of liability and an ACCC assessment will only lead to a product recall when it is necessary to protect consumers." We consider that the lower levels of reporting among small to medium sized business may be the result of a lack of awareness among these businesses of the provisions which came into effect this year. It may be that further publicity and education by the ACCC regarding the mandatory reporting requirements, and the circumstances in which they apply, will increase the awareness of the reporting provisions under the ACL among small to medium size enterprises.
The high levels of reporting shown in the statistics on the first six months under the new reporting regime show that some businesses have clearly heeded the ACCC's message in the Guidelines that if there is doubt about whether to report an incident, it is appropriate to report it, and that suppliers should be very cautious about choosing not to report incidents.
How the ACCC approaches the challenge of increasing compliance with the mandatory reporting requirements among small to medium sized businesses remains to be seen. However, these businesses should ensure that they are fully aware of the obligations that the mandatory reporting law bestows upon them as it is clear that they are in the ACCC's sights with respect to mandatory reporting.
Published: 17 October 2011
The assistance of Simone Vrabac, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated
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