Creating Confident Consumers

The Role of the Ministry of Consumer Affairs in a Dynamic Modern Economy

May 2003

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9. The Ministry's Role

The role of the Ministry of Consumer Affairs is to get the environment within which consumers and traders interact right, so that consumers can transact with confidence.

Fundamentally, this is about setting appropriate rules governing the behaviour of consumers, traders, markets, and institutions so that the gap between what consumers expect and what they get from a transaction is as small as possible. These rules include the rules governing enforcement and redress, as these mechanisms provide important incentives for suppliers to comply with consumer regulation and so meet consumers' reasonable expectations.

In deciding whether regulation (including self-regulation) is an appropriate response to a problem the focus of the Ministry should be on improving the consumer's estimates of the value of information and/or reducing the cost of the information to the consumer.

In addition to its primary role in creating an environment that is conducive to good and accurate information flows between suppliers and consumers, the Ministry also has an information delivery role. This includes:

• Explaining consumers' and suppliers' rights and responsibilities under consumer law.
• Providing information on the safe use of products, where doing so fills an information gap that is unlikely to be filled in any other way.
• Targeting consumers who are more likely to face barriers to information access. Such consumers are more likely to make bad deals, and so are less likely to be able to transact with confidence. [29]

Government agencies such as the Ministry are in an ideal position to provide unbiased information as they do not stand to gain from promotion of a particular brand or product.

Other organisations, however, may be better placed than the Ministry to deliver such information to consumers - because the Ministry, as a small central government agency, lacks economies of scale and does not always have direct links into communities around New Zealand. Where this is the case, the Ministry should provide information through organisations that have the necessary connections.

[29] The Ministry of Consumer Affairs and in particular its Consumer Information Service (CIS) currently targets Māori, Pacific peoples, and low-income consumers.

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