Have the new competition and consumer laws been considered in your QA Systems?

Have the new competition and consumer laws been considered in your QA Systems?
November 2010
New consumer laws, which the Australian Government calls the "biggest reforms to consumer laws in a generation" are already partly in operation and more will come into effect on 1 January 2011. Business owners need to know what their new obligations are and the changes that have to be made to their business documents and processes, including their formal Quality Management Systems (QMS). These new consumer laws will impact all businesses engaged in trade or commerce. In particular the laws will affect:

· Misleading or deceptive conduct
· Unconscionable conduct
· Unfair contract terms.
· False or misleading representations and unfair practices.
· Consumer guarantees (in place of warranties) for goods and services.
· Unsolicited goods and services.
· Safety of goods and services.

Business customers and consumers will have a wide range of remedies for breaches of the new laws, including damages, compensation and avoidance of terms. It is expected that these new laws will be robustly enforced, with a powerful and comprehensive toolbox of enforcement powers, eg:

· the issue of infringement notices
· Civil penalties up to $220,000 for individuals
· $1.1 million for companies.

It is recommended that businesses review their standard contracts for consumer and commercial transactions to ensure compliance with the new consumer laws. In particular they need to be satisfied that these contracts do not contain unfair contract terms or terms relating to consumer guarantees or warranties that do not comply.With respect to a QMS, this legislation covers two very relevant issues concerning

· “acceptable quality”
· “safety of goods and services”

Acceptable QualityThis is defined in the legislation as meaning goods that are:“ (a) fit for all the purposes for which goods of that kind are commonly supplied; and(b) acceptable in appearance and finish; and(c) free from defects; and(d) safe; and(e) durable,as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of goods), would regard as acceptable".

Such matters include the nature, price, statements and representations and other relevant circumstances relating to the goods.

Safety of Goods and Services
Safety standards for consumer goods and product related services may be declared, and bans may be imposed on consumer goods and product related services which may cause injuries (interim or permanent) and notices may be issued for compulsory recall of goods.
Safety warning notices may be required, and reports of injuries are required.
Information standards may be required for goods and services.
Actions are provided against manufacturers for goods with safety defects.
Businesses should therefore consider establishing and implementing appropriate compliance programs (eg. QMS) to ensure the requirements of the new “Australian Consumer Law” are met. Such a QMS will not necessarily prevent a breach, but, if effectively implemented, it should reduce the risk. Importantly, if a breach of this legislation does occur, and proceedings are instituted, the verifiable presence of a compliance program and culture may assist in mitigating the breach and reducing any penalty.
Ensure your product complies! Contact EQAS now