The Commerce Select Committee has reported back to Parliament on the Consumer Law Reform Bill (the Bill), recommending it be passed with a range of amendments. The Bill will make significant changes to several different consumer laws.

The Bill was first introduced to Parliament in April 2011 (see our May 2011 Consumer Law Reform update).

This update sets out the major decisions that have been made during the Select Committee process, and highlights the changes that are most likely to affect businesses.

The next step is that the Government will move the Bill through its remaining Parliamentary stages, including debate in Parliament.  While changes can be made to the Bill during those stages, there is no further formal opportunity for public comment.

Key changes arising out of the select committee process

The Commerce Select Committee has recommended a number of changes to the Bill as introduced, including:

  • The introduction of a new prohibition on the use of unfair terms in standard form consumer contracts (which was proposed in a discussion paper released by the Ministry of Consumer Affairs in 2010, but not included in the Bill as introduced)
  • A clarification that the new prohibition on unsubstantiated representations should not apply to representations that a reasonable person would not expect to be substantiated.
  • A requirement that any contracting out of the Consumer Guarantees Act for business transactions must be "fair and reasonable" (so that it lines up with the proposed new contracting out provision in the Fair Trading Act)
  • Increased maximum penalties for breaches of the Fair Trading Act (from $60,000 to $200,000 for individuals, and $200,000 to $600,000 for bodies corporate)
  • Enhanced enforcement powers for the Commerce Commission, including providing the Commission with the power to compel a person to attend an interview and give evidence in relation to offences under the Fair Trading Act (as it can currently do under the Commerce Act)
  • The removal of changes relating to the Carriage of Goods Act (except the increased liability cap for limited carrier's risk contracts in relation to lost or damaged goods)
  • The introduction of a new guarantee as to delivery in the Consumer Guarantees Act.

The Committee has also indicated that including a prohibition on unconscionable conduct should be addressed, but the Committee recommended that the position be reviewed once Australia has developed a body of case law in relation to the prohibition of such conduct under the Australian Consumer Law.

What will changes mean for business?

The table available here sets out some of the key changes proposed in the Bill, and what those changes may mean in practice for businesses.