Introduction

• Purpose of This Document

The Ministry of Consumer Affairs (MCA) has commenced a review of the redress and enforcement provisions in the Fair Trading Act 1986 (FTA) and the Consumer Guarantees Act 1993 (CGA). The purpose of this review is to try and measure the effectiveness of the current redress and enforcement provisions in the legislation and then to assess whether there is a need to amend either the FTA or the CGA.

In this review, it is proposed that the effectiveness of the redress and the enforcement provisions in the FTA and the CGA be measured against the desired policy outcome that consumers' reasonable expectations of transactions are being met. An intervention logic that identifies the intermediate outcomes that would need to be achieved and the assumptions that are being made for the desired policy outcome to occur has been developed as part of this review.

The redress and enforcement provisions that are available in the FTA and the CGA will be compared with the provisions found in consumer protection legislation in similar jurisdictions overseas. Where other jurisdictions have redress and enforcement provisions in their consumer protection legislation that are not found in the FTA or CGA an assessment will be made as to whether their availability would provide assistance in the achievement of the desired policy outcome. Theoretical and conceptual literature focusing on consumer protection legislation, how compliance can be achieved and the effectiveness of different enforcement measures will inform this review.

This review will also make use of data collected from two surveys that MCA is conducting during 2005. The first survey will ask consumers about their knowledge and attitudes to consumer protection legislation and their experiences of seeking redress. The second survey will focus on traders.[1] Traders will be asked questions that focus on their level of knowledge of the FTA and the CGA, how it applies to their businesses and their experiences of working with the legislation.

Purpose of This Document

This initial think piece document outlines the scope of the project and provides a summary of the theoretical and conceptual literature which underpins the review's subject matter. MCA welcomes any comments you may have on the approach that is being proposed and any suggestions on literature sources that may better inform the review. MCA also invites comments on the intervention logic that has been developed, the assumptions that are being made and the way we are proposing to test our assumptions.

This document is divided into three parts. The first part outlines the purpose of the review. The scope, desired outcomes, structure and the proposed timeline for review are all outlined in this section.

The second part summarises theoretical and conceptual literature that to date has been used to inform this review.

In considering the theoretical and conceptual literature, examples of how an approach is presently being used in New Zealand consumer protection legislation and enforcement are used as much as possible. There is discussion of how punishment can be used as a catalyst for compliance and how enforcement and compliance strategies can be used by regulatory enforcement agencies to secure compliance with their legislation.

As well as effective punishment and enforcement strategies, effective consumer protection law is dependent on trader and consumer awareness of the legislation. The impact that awareness and access to redress has on the effectiveness of consumer protection legislation is then discussed.

Part three sets out the intervention logic diagrams that have been developed to measure the effectiveness of the redress and enforcement provisions in the FTA and CGA against the policy outcome that consumers' reasonable expectations of transactions are being met.

[1] The term "traders" is used in this document consistent with the Fair Trading Act term "trade". Under the Consumer Guarantees Act the term "supplier" is used with a similar meaning. For the most part traders are businesses, who may be the direct supplier of a good or service, or a manufacturer or importer or agent.