AUSTRALIA
Annual Report on Consumer Issues
1999
I. Institutional developments
Amendments to the Trade Practices Act 1974
In June 1999, several Acts including A New Tax System (Trade Practices Act 1974) Amendment Act were passed by the Australian Parliament for implementation of the New Tax System (goods and services tax). Amendments to the Trade Practices Act 1974 introduced part VB, creating the offence of price exploitation in relation to the New Tax System. The Australian Consumer Competition Commission (ACCC) was given the power to investigate and prosecute profiteering by business during transition to the new system.
Review of legislation
Development of legislative amendments arising from the audit of Australia's consumer protection laws continued through 1999. The Consumer Affairs Division of the Department of the Treasury worked with States and Territories to promote uniformity in consumer protection provisions, in particular, the regulation of pyramid selling.
Office of Consumer Protection
Following legislative changes in 1998, the Australian Securities and Investments Commission (ASIC) gained primary responsibility for consumer protection and market integrity in the financial services sector. In early 1999, ASIC established an Office of Consumer Protection, to provide strategic advice on consumer protection issues to all of ASIC's regulatory programmes.
Consumer Advisory Panel
ASIC established a Consumer Advisory Panel (CAP) to advise on consumer protection issues. The Panel consists of an independent chair and nine consumer representatives from key consumer groups. CAP provides ASIC with a formal source of advice on issues concerning various consumer constituencies and on the consumer protection implications of ASIC's work.
Industry Self-Regulation Taskforce
In September, the Minister for Financial Services and Regulation announced the establishment of a Taskforce on Industry Self-Regulation. The Taskforce will inquire into and report on aspects of self-regulation in Australia. Its primary objective is to provide advice on how the Australian Government can encourage industry self-regulation by setting out principles for effective practice (defined in terms of lowering regulatory costs on business and improving market outcomes for consumers). The Taskforce is expected to report in August 2000.
Ministerial Council on Consumer Affairs (MCCA)
The Consumer Affairs Division, ACCC and ASIC maintained close links with State and Territory consumer affairs and fair trading agencies. Formal links were provided through the Ministerial Council on Consumer Affairs (MCCA).
MCCA's key activities in 1999 included:
Commonwealth Consumer Affairs Advisory Council (CCAAC)
The Commonwealth Consumer Affairs Advisory Council (CCAAC) was established by the Minister for Financial Services and Regulation on 20 May 1999. CCAAC's role is to provide the Minister with independent advice on the current or likely impact of Australian market developments on consumers. Particular areas to be addressed include financial services, privacy, genetically modified food, electronic commerce, new technologies and consumer education.
Memorandum of Understanding
In July, the ACCC and the New South Wales Health Care Complaints Commission (HCCC) signed a memorandum of understanding on co-operation between the two agencies. The proposed agreement will formalise liaison between the two agencies and provide better co-ordination and co-operation on enforcement and education activities.
International Consumer Policy and Protection Agreement
The ACCC and Consumer Affairs Division continued negotiations with the European Commission on development of an administrative arrangement to share information between Australia and the European Commission on consumer policy and protection. It is expected that an arrangement will be finalised in 2000.
The ACCC also began discussing the framework for a possible agency to agency consumer protection information sharing arrangement with the US Federal Trade Commission.
Staff exchange programme
The ACCC commenced its first staff exchange with the Consumer Policy and Consumer Health Protection Directorate (DGXXIV) of the European Commission. The Commission also conducted staff exchanges with the Taiwan Fair Trade Commission, the Korean Fair Trade Commission and the New Zealand Commerce Commission.
II. Product safety
Product safety recalls
Under the Trade Practices Act 1974, companies conducting safety-related voluntary recalls are required to notify the Commonwealth Minister responsible for Consumer Affairs. In 1999, there were 424 safety-related voluntary recalls conducted in Australia relating to: therapeutic goods (147), vehicles (130), toys (10), electrical (19), food (61), and other products (57).
Product Safety Recalls Web Site
Development of the Product Safety Recalls Web Site, established in 1998, continued during 1999. The site, still in its early stages of development, provides consumer access to relevant information about consumer product safety recalls. The project is designed to streamline provisions contained in Commonwealth, State and Territory consumer legislation, and simplify notification arrangements for Australian businesses.
Product safety and information standards
Reviews of mandatory product safety and information standards were undertaken by Consumer Affairs Division to ensure that standards remain relevant; up to date; consistent across Australia; and address identified safety risks. In 1999, reviews were completed for elastic luggage straps, pedal bicycle helmets, portable fire extinguishers, portable fire extinguishers (aerosol type), children's nightclothes, paper patterns for children's nightclothes, and pedal bicycles.
Bans
In September, candles with lead wick cores and wicks with lead cores were banned from sale or supply in Australia because an independent study found that the candles transfer lead particles into the air and could create a health hazard.
Enforcement action by the ACCC
The ACCC took enforcement action against a number of businesses that allegedly breached mandatory safety or information standards. Products subject to action included children's swimming aids, bean bags, pedal bicycles, motor cycle helmets and high tar cigarettes. The ACCC also commenced development of a guideline for product safety benchmarks, which is due for completion in late 2000.
III. Protection of the economic interests of consumers
Self-regulation / codes of conduct
ASIC conducted its first monitoring exercise for compliance with Banking, Credit Union, Building Society, and Electronic Funds Transfer Codes of Conduct, covering 1 April 1998 to 31 March 1999. A report of the results, released in January 2000, showed high compliance levels.
ASIC convened a working group to review the Electronic Funds Transfer Code of Conduct and its application to new technologies, such as Internet banking, telephone banking and stored-value cards.
The ACCC advised industry on trade practices compliance strategies and aided development and review of industry-specific codes of conduct. The Commission also prepared a detailed submission for the Taskforce on Industry Self-Regulation.
Enforcement activities in the financial services sector
ASIC conducted a large number of enforcement actions during 1999 under the consumer protection provisions of the ASIC Act, the Corporations Law, and industry specific legislation. Major or typical activities included:
Surveillance activities
ASIC completed a number of campaigns designed to improve compliance with relevant legislation, and to inform itself about areas of high risk. Campaigns included:
Superannuation disclosure documents
ASIC reviewed disclosure documents provided by superannuation companies to continuing fund members. The campaign showed that 97% of annual reports complied with all mandatory requirements, however, there were some concerns about non-compliance with member statements.
Unregistered insurance brokers
ASIC surveyed the telephone directory listings for insurance brokers, and found over 300 people who held themselves out to be registered brokers but were not registered with ASIC. Following the results, ASIC contacted all such brokers, ran a media campaign about the importance of dealing with a registered broker, and took legal action against some unregistered brokers.
Review of Internet banking sites
ASIC undertook a preliminary review of Internet banking sites, focusing on financial services that are promoted or offered through individual sites, and how promotion and delivery by the institutions measure up against consumer protection standards.
Consumer protection in electronic commerce
Consumer Affairs Division, the ACCC and ASIC participated in activities of the OECD Committee on Consumer Policy, in particular, the development and finalisation of the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce.
In October, Australia released its domestic Policy Framework for Consumer Protection in Electronic Commerce. The framework identifies specific initiatives that the Australian Government will be undertaking to achieve its objectives regarding consumer protection in e-commerce.
In November, a national consultation process, involving both written submissions and workshops, took place in relation to a Model Code for Traders in Electronic Commerce. The Model Code entitled Building Consumer Confidence in Electronic Commerce: A Best Practice Model for Business is expected to be finalised in the first half of 2000.
ASIC established an Electronic Enforcement Unit, which in 1999, developed software to enable automation of Internet surveillance, trained other staff on the basics of Internet enforcement, conducted e-enforcement and litigation of significant matters, and provided a framework for forensic computing and e-enforcement within the organisation.
The ACCC developed Internet enforcement strategies through its Internet commerce and competition project (ICCP). The project's goal is to enhance the welfare of Australians by fostering consumer confidence and participation in e-commerce by promoting:
The ACCC worked co-operatively with the US Federal Trade Commission to break a global page-jacking and mousetrapping Internet scam. The scam took unsuspecting users to pornographic sites and prevented them from quitting those sites. The ACCC provided information on the Australian end of these operations and is also conducting its own investigation into possible involvement by Australian parties.
The ACCC took enforcement action against three e-commerce businesses for alleged breaches of the Trade Practices Act in relation to misleading and deceptive conduct and pyramid and referral selling.
Internet sweep day
The ACCC participated in the 1999 International Internet Sweep Day that focused on assessing e-commerce Web sites according to a number of consumer protection principles. The Sweep Day was co-ordinated by the International Marketing Supervision Network (IMSN).
Results showed that 62% of sites had no information on refunds/exchanges, 75% had no statement on how consumers' personal information would be handled and 56% had no information regarding the security of online payment mechanisms. Each site examined was sent an e-mail explaining that the Sweep had taken place and giving details for obtaining further information.
Enforcement of the Trade Practices Act 1974
The ACCC undertook legal action under the Trade Practices Act, including actions for:
The majority of complaints were resolved by administrative action.
IV. Consumer education and information
Disadvantaged consumers
Consumer Affairs Division's three-year consumer education programme for disadvantaged consumers continued through 1999, with the main emphasis on information materials for older Australians in recognition of the International Year of Older Persons.
The Division also worked with Commonwealth and State Government departments to jointly produce publications on investment, self-funded retirees, housing options for older people, and "scams".
Consumers online
The Division developed a new Web site for consumers containing information pages, references and hyperlinks for a wide range of consumer issues. The site was designed to conform with World Wide Web Consortium (W3C) accessibility standards to enable it to be used by a broad range of users, including those with older computers and people with visual impairments using voice-activated screen readers.
A series of Fact Sheets on Internet Shopping were released jointly by Consumer Affairs Division and the National Office for the Information Economy, to target consumers new to electronic commerce and provide advice on effective methods of shopping on the Internet.
ASIC activities
In July, ASIC released a stocktake of existing consumer education initiatives in the financial services sector, which will be used to develop a comprehensive consumer education strategy in 2000.
Other education activities included:
Millennium bug insurance scam
ASIC established a fake Internet investment site, which attracted 10 200 visitors; 1 212 requests for more information; and 233 investors pledging AUD 4 million. When the site was revealed, ASIC sent e-mails to all those who asked for information or pledged funds to explain why the scam was run and what steps investors could take to protect themselves from similar scams in the future. Publicity generated by the scam helped educate consumers about the possible risks involved in investing on the Internet and basic Internet safety checks that can be taken before investing, including free searches on ASIC's Web site.
The Gull (gullibility) Awards
ASIC started a new page on its Web site containing true stories about outrageous financial scams. The best "Gull" wins a Gull of the month award.
Consumer alerts
ASIC released Consumer Alerts on issues such as online broking and cold-calling to warn consumers about problems and educate them about commonly misunderstood areas.
Consumer publications
ASIC developed and released a number of consumer brochures and publications, including Super Decisions, and a revised version of Don't Kiss Your Money Goodbye, a guide to choosing a financial adviser.
Infoline
ASIC continued to operate Infoline, its principal call centre for regulatory and enforcement activities.
Investor forums and ASIC Speaks seminars
ASIC held regular public meetings and seminars designed to provide information about investing and related issues.
ACCC activities
ACCC consumer protection publications released in 1999 included:
A draft guideline was produced by the ACCC and the HCCC relating to advertising of medical and other health services. Completion of the guide is expected in 2000.
Business education
The ACCC published two guidelines for the information of small business. The first dealing with the Act generally, and the other specifically focusing on unconscionable conduct provisions. A business education guideline was also produced on corporate trade practices compliance programmes.
V. Redress and complaints facilities
Consumer redress mechanisms
In June, the Minister for Financial Services and Regulation released the results of the Consumer Redress Study, which examined a selection of the Industry Based Customer Dispute Resolution Schemes and Small Claims Courts operating in Australia. Overall, the study confirmed the effectiveness of existing redress mechanisms and identified a range of areas for further examination and attention.
ASIC released a policy statement outlining the standards to be used by ASIC when assessing applications for approval of alternative dispute resolution (ADR) schemes in the financial sector.
In 1999, ASIC approved two schemes: the Financial Industry Complaints Service, and the Financial Services Complaints Resolution Scheme. In December, the two schemes announced an intention to merge.
ASIC continued to chair the quarterly Complaints Scheme Roundtable, which brings together the managers of all complaints schemes and two consumer representatives. It also administered the Financial Complaints Referral Centre, which refers consumers to appropriate dispute resolution schemes.
Slam a scam
A revamp of the ACCC Web site's "Slam-a-Scam" facility was undertaken to improve the format of the online form. Redevelopment is expected to continue through 2000.
VI. Consumer issues related to other policy areas
Undue harassment and coercion
The ACCC completed its report on undue harassment and coercion in debt collection, which was published in May 1999. A plain language guideline was also published in July. In October, the Commission instituted its first proceedings under section 60 of the Trade Practices Act 1974 against Cash Return Mercantile Pty Ltd, alleging harassment or coercion in relation to payment of goods and services.
Food Regulation Issues
The ACCC continued consultation with the Australian and New Zealand Food Authority (ANZFA) with respect to the Food Standards Code Review. A draft of a new joint Australia New Zealand Food Standards Code is expected in 2000.
Latest update 25 January 2001