Review of the Redress and Enforcement Provisions of Consumer Protection Law

The Ministry of Consumer Affairs (MCA) is undertaking a review of the effectiveness of the redress and the enforcement provisions in the Fair Trading Act 1986 (FTA) and the Consumer Guarantees Act 1993 (CGA). The review is being conducted as part of the government's ongoing monitoring of its legislation in order to assess how effective it is in practice in achieving desired outcomes.

Creating an environment where consumers can transact with confidence is the ultimate goal of consumer protection policy. What this means in practice is that consumers should get what they reasonably expect from a purchase and, if not, have access to redress.

In order to create an environment where consumers can transact with confidence, the government provides information and establishes market rules (including setting standards and having consumer law setting out rights and protections) and provides mechanisms for their enforcement (including access to redress).

As part of the review, MCA released an initial thinkpiece document. This document outlined the scope of the project and summarised the theoretical and conceptual literature which underpin the review's subject.

MCA has undertaken a survey of consumers and is currently surveying businesses in order to gain an understanding of their experience, awareness and understanding of consumer rights in the marketplace.

Also, as part of the review, MCA is monitoring whether our consumer protection laws are delivering the best possible outcomes for consumers and compliant businesses by comparing our laws with those in similar overseas jurisdictions. This approach provides not only a type of benchmarking exercise but also ensures we are aware of current international consumer policy trends.

A discussion paper on this compared the redress and enforcement provisions of the FTA and the CGA with those found in consumer protection legislation in Australia, Canada, the USA and the United Kingdom. The comparison suggested that the approach taken by New Zealand's consumer protection law is consistent with other similar jurisdictions.

Whilst there are no significantly different approaches in the overseas legislation, analysis has indicated that there may be some additional, particularly mid level enforcement tools, that may be worth considering for adoption.

It is proposed that amendments to the FTA be considered to provide for:

• Unfair terms in consumer contracts prohibition;
• Product safety warning notices and powers of investigation;
• Cease and desist orders;
• Substantiation notices;
• Court enforceable undertakings;
• Compulsory interview powers; and
• Banning orders.

These would all require amendments to the FTA. The paper also identified a number of other provisions that the Ministry of Consumer Affairs is not proposing to progress. Submitters were, however, asked for comments on all the provisions. Submissions closed on 29 June 2006 and a summary of them was published on 27 September 2006.

Documents

• Summary of Submissions on the International Comparison Discussion Paper (27 September 2006)
• Media Statement: Submissions Called for on Consumer Protection Laws (2 May 2006)
• International Comparison Discussion Paper  (May 2006)
• Media Statement: Release of Initial Think Piece Document for the Review of the Enforcement of Consumer Protection Law (20 July 2005)
• Initial Think Piece (July 2005)