2. Introduction

There are several consumer laws that deal with the purchase of goods and services. These laws, taken together, seek to promote better outcomes for consumers through:

• protection from misleading and deceptive conduct, unfair practices and unsafe or defective goods or services
• assistance in making better purchasing decisions by ensuring consumers receive appropriate product information, or in some cases by changing the terms and conditions on which goods and services are purchased (such as cooling-off periods)
• standardisation in weights and measures
• provision of remedies when the reasonable expectation of a consumer transaction is not met, and
• enforcement by the Commerce Commission of good market conduct.

Effective consumer laws help to create a competitive business environment in which consumers can transact with confidence and reputable suppliers are protected from inappropriate market conduct. The advantage for reputable suppliers is that they can compete on a level playing field. Confident and empowered consumers, in association with responsive suppliers that trade fairly, promote effective competition and overall benefits for consumers. Confident and empowered consumers have an important role in the development of dynamic and trusted markets.

The principal consumer laws dealing with the purchase of goods and services are:

• Fair Trading Act 1986
• Consumer Guarantees Act 1993
• Weights and Measures Act 1987.
• There are also:
• Auctioneers Act 1928
• Door to Door Sales Act 1967
• Layby Sales Act 1971
• Unsolicited Goods and Services Act 1975.

As part of the government’s commitment to regulatory responsibility, the Ministry of Consumer Affairs is undertaking a review of the consumer laws listed above with the view to achieving reform.¹

Why the review

Where consumer laws do not achieve their objective or are no longer relevant to the way the market operates, they can be a drag on the innovative potential of businesses. Consumer law that is potentially out of date and may no longer be relevant is also a compliance problem for businesses and consumers.

The Government Statement on Regulation: Better Regulation, Less Regulation released by the Minister of Finance and the Minister of Regulatory Responsibility in August 2009, states:

“Outdated, poorly conceived and poorly implemented regulation can significantly hinder individual freedom, innovation, and productivity. Reducing the burden imposed by such regulation will help unshackle our economy and give New Zealanders more ability to shape and improve their own lives.
New Zealand needs to offer a better policy environment than can be found elsewhere if we are to overcome the economic disadvantages of our small size and geographical isolation, and attract and retain increasingly mobile talent, skills, capital, technology and entrepreneurship.
This is why improving the quality of regulation is a priority for this government. We believe that better regulation, and less regulation, is essential to assist New Zealand to become more internationally competitive and a more attractive place to live and do business.”

It is questionable whether there need to be 7 specific consumer laws dealing with consumer transactions. Most of the consumer laws covered in the review are older than 20 years. Some of the laws are quite prescriptive. None have modern purpose statements signifying their intent or underlying principles. Whilst there have not been concerns raised that the laws are ineffective, most have not been reviewed recently, or previous reviews have not resulted in any changes because of other priorities.

There is not good public recognition of consumer legislation other than the Consumer Guarantees Act and the Fair Trading Act. A major survey of consumers’ awareness² of their rights and consumer law , undertaken mid-2009, showed that less than 2 percent could name the Weights and Measures Act as consumer legislation they were aware of, and less than 1 percent could name the Layby Sales Act, the Unsolicited Goods and Services Act and the Sale of Goods Act. There was no recall of the other pieces of law.

The Government also has a commitment to achieving, where possible, a single economic market (SEM) with Australia. SEM is based on the objective that deeper economic linkages between New Zealand and Australia provide bigger markets in which to buy and sell goods and services, allow access to a larger and more varied pool of capital and labour, and open our economy to new ideas and technology. SEM aims to address behind-the-border impediments to trade. This includes identifying innovative actions that could reduce discrimination and costs arising from different, conflicting or duplicate regulatory requirements. The aim is to ensure that trans-Tasman markets for goods, services, labour and capital operate effectively and support economic growth in both countries.
The Fair Trading Act 1986 is very similar to the consumer provisions in Australia’s Trade Practices Act 1974.

Australia is currently undertaking a major reform of its consumer laws with the introduction of the Australian Consumer Law. The Australian Consumer Law will replace the consumer protection and fair trading provisions in the national Trade Practices Act and each State and Territory’s fair trading laws with a single national consumer law, applied as the law of each Australian jurisdiction. As part of the reforms there will also be a new policy development and decision-making framework through the Ministerial Council on Consumer Affairs (MCCA), and a coordinated approach to enforcement, compliance and education by Australia’s consumer agencies.³ As a member of MCCA, the New Zealand Government has been involved in the development of the Australian Consumer Law and is following the reform process closely.

The review of our consumer law at the same time as the Australian Consumer Law reforms is very timely and provides a real time opportunity to achieve harmonisation of approach where this is appropriate.

Objectives of the review

The objectives of the review are:
To have in place principles-based consumer law that:

• enables consumers to transact with confidence;
• protects reputable suppliers and consumers from inappropriate market conduct;
• is up to date and relevant now and into the future;
• is easily accessible to those who are affected by it;
• is in line with international best practice, as appropriate; and
• is effective and enforceable;
• To achieve simplification and consolidation of the existing law; and
• To achieve harmonisation with the Australian Consumer Law, as appropriate, in accordance with the government’s agenda of a single economic market with Australia (SEM).

What the review encompasses

In accordance with the Government Statement on Regulation: Better Regulation, Less Regulation, the 7 consumer laws noted above are being reviewed in order to identify any requirements that are unnecessary, ineffective or excessively costly.

Specifically, each of the consumer laws is being reviewed by looking at its history and original purpose, its ongoing relevance and, if still relevant, whether it is sufficiently up to date for consumer transactions of today and the overall effectiveness and enforceability of the law. The review of the overall effectiveness includes looking at any gaps in the law taking into account best practice international consumer law.

As part of the review of each consumer law, consideration is also being given to whether it could be incorporated into an enhanced Fair Trading Act or whether it should remain as standalone law.

The review also is considering the Carriage of Goods Act 1979 with respect to its coverage of consumer transactions and the Sale of Goods Act 1908 with respect to its relationship to the Layby Sales Act and the Auctioneers Act. These laws are not being reviewed, however, in the same manner as the other 7 consumer laws.

Footnotes

 1. There are also other industry-specific laws which have a consumer protection function, but which fall outside the scope of this review. These laws include the Real Estate Agents Act 2008, the Lawyers and Conveyancers Act 2006 and the Immigration Advisers Licensing Act 2007.

2. National Consumer Survey 2009

3. More information about the reforms can be found at: http://www.treasury.gov.au/consumerlaw.