Source: Consumer NZ
A cohort of the country’s consumer advocacy groups have issued an open letter to finance and economic growth minister Nicola Willis and commerce and consumer affairs minister Scott Simpson, urging them not to bow to pressure from big business lobby groups and shy away from proposed fair trading reforms.
Consumer NZ, FinCap (the charitable trust supporting financial mentoring services), Community Law Centres Aotearoa (the free legal help service for vulnerable consumers) and Citizens Advice Bureau (the nationwide community organisation offering free advice) have joined forces out of concern that proposed amendments to the Fair Trading Act (FTA) could be watered down, following lobbying from business groups.
“We don’t want to see New Zealanders left on the back foot with weaker consumer protections than the rest of the world has just because big business is throwing its toys out the cot,” says Jon Duffy, Consumer NZ chief executive.
“Our current laws make it easy for businesses to breach the rules without real consequence. It’s consumers that pay the price.”
Industry associations representing powerful sectors, including electricity, telecommunications, retail and retirement villages recently sent a letter to Minister Willis criticising the proposed FTA reforms and the consultation process.
As a result, several key proposals – including expanding the infringement offence regime and stronger unfair contract term provisions to enable consumers to enforce their rights – are reportedly now off the table.
“Changes to the unfair contracts regime would be a game-changer for consumer rights, so it’s deeply disappointing to see these changes wound back at the behest of vested interests,” says Duffy.
“We hear from consumers every day about the one-sided deals they’re stuck with – from people unable to cancel their gym contracts to elderly retirement village residents having to fork out for repairs and maintenance on a property they don’t own or wanting to move but unable to get their money out in a timely fashion.
“There’s very little you can do, apart from lodge a complaint with the Commerce Commission, which lacks the resources to act on most complaints. Enabling people to take complaints to the Disputes Tribunal would give the law teeth,” says Duffy.
The importance of penalties
“Penalties for breaches of the FTA are comically light in New Zealand compared with in other jurisdictions, so we’re pleased the Government hasn’t backed away from improving these,” says Duffy.
“Right now, penalties are often treated by businesses as a simple cost of doing business. We need a real paradigm shift, where large companies invest in better systems to ensure compliance and are genuinely held to account when they don’t. Introducing higher penalties would encourage changes to poor business practices.”
Advocacy groups are also concerned that penalties for businesses that harass or coerce consumers need to be introduced; an issue that particularly impacts vulnerable consumers.
“Currently, a debt collector wouldn’t be penalised for harassing or coercing someone who is unable to meet unreasonable payment demands. Conduct like this can mean it’s game over for someone who is trying to keep food on the table without a KiwiSaver hardship withdrawal or insolvency procedure,” says Fleur Howard, FinCap chief executive.
Community Law Centres Aotearoa echoes the sentiment.
“Attaching penalties to harassment or coercion is one way to strengthen regulation of debt collection activities and incentivise better behaviour,” says Sue Moroney, Community Law Centres Aotearoa chief executive.
Consumer has also called for the Government to reconsider the infringement offence regime, to ensure businesses comply with their FTA obligations.
“We believe the Commerce Commission needs greater powers to issue infringement notices with meaningful fines for clear-cut breaches of the act. Otherwise, businesses will continue to flout the law, to the detriment of consumers, knowing they’re unlikely to face consequences,” says Duffy.
“The FTA needs modernising so there are serious penalties for causing serious harm to consumers. Collectively, we urge the Government not to miss this much-needed opportunity to make our FTA fairer.”
