The first review of the Australian Consumer Law (“ACL”) is well underway, with an interim report being issued last month. The review, conducted by Consumer Affairs Australia and New Zealand (CAANZ), captures feedback from over 160 submissions that were received on the Issues Paper (“Interim Report”).

The Interim Report does not provide draft recommendations, but rather canvasses a number of options for reform that are based on public feedback. It discusses a wide range of issues raised and potential options to enhance the effectiveness of consumer guarantees, product safety legislation, the prohibition on unconscionable conduct, the unfair contract terms regime and unsolicited consumer agreements legislation. The options on which CAANZ is seeking feedback include the following:

  • the introduction of a general prohibition against the supply of unsafe goods;
  • the clarification of what amounts to a “major failure”, for example, by specifying that multiple “non-major failures” can trigger a “major failure”;
  • the reform to the maximum financial penalties that apply to breaches of the ACL, including an option to align the penalty regime with the maximum penalties that currently applies to the competition provisions in Part IV of the Competition and Consumer Act; and
  • the extension of protection against unconscionable conduct to publicly listed companies.

However, it is difficult to predict at this preliminary stage which options will be ultimately recommended by CAANZ.

CAANZ also made a number of observations which may provide some insight into recommendations that CAANZ may put forward:

  • it is not clear that there is a current regulatory gap that warrants the introduction of a general and economy-wide prohibition against “unfair trading”;
  • there are benefits to maintaining a generic approach to consumer guarantees (as opposed to industry specific laws, e.g. “lemon laws” for motor vehicles); and
  • the ACL is generally broad enough to capture emerging issues in online sales.

Interestingly, CAANZ observed in the context of the general prohibition on misleading and deceptive conduct that monetary penalties are not usually attached to broad norms of conduct. Proposals to attach financial penalties for a breach of this general prohibition had been put forward by some stakeholders, including CHOICE. CAANZ also stated it considered it “unclear” the anticipated benefits of this proposal would outweigh associated risks and costs.

CAANZ is seeking feedback from stakeholders in sufficient detail to test the issues and options presented in the Interim Report. The closing date for submissions is Friday 9 December 2016. Please let us know if you need help in preparing a submission.