The Consumer Law Enforcement and Administration Research Report (the Report) published by the Productivity Commission (the Commission) on 12 April 2017 evaluated the effectiveness of Australia’s current consumer protection framework. The Report specifically examined the effectiveness of the multiple-regulator model in administering and enforcing the Australian Consumer Law (ACL).

The current ACL framework is complex requiring the interaction of multiple regulatory bodies including two commonwealth regulators: the Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investments Commission, eight state and territory regulators and numerous specialist safety regulatory regimes. The Commission found that while the current multiple-regulator model operated reasonably effectively, across jurisdictions there were some inconsistencies and deficiencies.

The Report canvassed a number of findings and recommendations aimed at enhancing co-ordination and co-operation between the regulators to strengthen the administration of the ACL.

Some of these recommendations are relevant to insurers who provide cover to manufacturers and suppliers of goods, which would be the entities most likely to be effected by the proposed recommendations. We discuss some of the more relevant of these below.


Increasing issuance of infringement notices and the maximum financial penalties

The Commission noted that there are a number of differences in the regulators’ powers to respond to breaches of the ACL. In particular, state and territory ACL regulators are not empowered to issue infringement notices. The Commission recommended that state and territory regulators’ powers to issue infringement notices should be expanded. This would enable regulators to deal with a range of minor offences in a cost-effective manner.

The current maximum penalty available for ACL breaches is capped at $1.1 million per contravention for companies and $220,000 for individuals.

The Commission also recommended that the government increase the maximum financial penalties for breaches of the ACL. It found that current financial penalties were insufficient to deter breaches and in certain cases as the benefits accrued by contravening the ACL outweighed the financial penalties.

The Report considered alternatives to increasing financial penalties. Firstly, to use ‘penalty units’ for offences, with the value of each unit being annually increased to keep up with inflation. Secondly, and more concerning, to factor in the size of the company and the benefit of the breach. This model is already used in relation to competition laws under the CCA, where companies can receive a maximum penalty that is the greater of $10 million, three times the value of the benefit received from the breach, or where the benefit (received cannot be calculated) 10% of annual turnover.

For insurers the imposition of such significant penalties for manufacturers ought to sound a significant alarm bell. To avoid being caught by these increased penalties (if implemented) insurers need to ensure that the typical ‘Fines and Penalties’ exclusions in their policies are worded clearly and precisely.

Information sharing through national database

To strengthen the enforcement and administration of the ACL, the Commission also proposed the development of a national database to improve intelligence gathering and sharing by ACL regulators. Access to more data will assist regulators to accurately assess risks and target compliance and enforcement activities.

The Commission also proposed the development of a publicly accessible register of information recording consumer complaints and product safety incidents. The Commission was of the view that this would assist consumer decision making and might positively influence business behaviour to the extent that listing consumer complaints could attract adverse publicity. It was acknowledged that publishing data on consumer complaints would need to be done in a comprehensive and careful way to minimise misleading inferences about businesses.

The obvious impact of this change for insurers is that it provides a publicly available history of ACL breaches and complaints by a company. This provides easily obtainable evidence for claimants to demonstrate a pattern of negligence or previous supply of defective products in a claim they may be bringing against an insured company. This is likely to be admissible as tendency evidence. The register will also provide insurers with readily accessible underwriting information.

Nationally consistent laws on electrical goods safety

The Commission noted that inconsistencies between state electrical safety regulations had resulted in circumstances where certain electrical products are legally sold in some jurisdictions while banned in others. The Commission recommended that state and territory governments should move to agree on nationally consistent laws on electrical goods safety.

Electrical good manufacturers have been under increased scrutiny for some time, which will be well-known to insurers of these companies. The proposed changes will further tighten controls over these manufacturers.

Review consumer alternative dispute resolution mechanism

The Commission recommended that the Government establish an independent review of ACL alternative dispute resolution mechanisms. It was recommended that the review should consider, amongst other things, expanding the powers of regulators to compel businesses to participate in ADR. As the law currently stands, regulators can only encourage businesses to participate and the Commission found that ADR services were underutilised.

We anticipate that this will have an impact on compelling parties to attend ADR at an early stage, when insurers may have not had a great deal of time to fully investigate claims. It will lead to a more ‘front-loaded’ system of claims assessment, similar to what is already seen with civil claims brought in the QLD and ACT jurisdictions.


It is apparent that recommendations in the Report are aimed at strengthening the powers of ACL regulators to punish offending companies. This has largely arisen from consumer concern over recent product failures, including the well publicised issues with the ‘Hoverboard’ and Samsung Galaxy Note 7 mobile phone.

The proposed increase to fines are concerning, and insurers need to ensure that the typical ‘Fines and Penalties’ exclusions in their policies are watertight.

The outcomes and recommendations of the Report will be considered by the Consumer Affairs Minister later this year and we will provide a further update on this when it becomes available.