ACL Review needs to ensure that its stronger consumer protections are widened into the finance sector

In December last year, the CFA hosted a Consumer Experts Roundtable on the forthcoming review of the Australian Consumer Law (‘ACL’). The ACL Review will take place in 2016, with a report to be provided to Ministers in early 2017.

The introduction and implementation of the ACL was one of the major recommendations of the Productivity Commission’s 2007-2008 Review of Australia’s Consumer Policy Framework. With the ACL Review now upon us, it is timely to revisit the implementation of some of the other recommendations of the Productivity Commission’s review.

Are the protections for consumers of financial services equivalent?

3714941137_cebcdcac56_zAt the Federal level, the ACL is implemented through the Competition and Consumer Act, but it does not apply to financial products and services. Instead, mirror provisions are found in the Australian Securities and Investment Commission Act (ASIC Act), which applies to financial services. However, there is at least one big difference. The ASIC Act still contains the old implied terms regime to regulate general quality of services. This regime was criticised as causing confusion, uncertainty, and/or unnecessary costs for consumers and businesses, and as a result, it was replaced in the ACL by a new, more consumer friendly, consumer guarantees regime.

It is not obvious why the consumer guarantees were not included in the ASIC Act. Was it thought that the financial services sector is so highly regulated that consumer guarantees aren’t needed? On the other hand, there are many other highly regulated sectors that are subject to the consumer guarantees regime. Why should consumers of financial services be singled out for different generic consumer protections? The ACL Review needs to ensure that the generic consumer protections apply to the financial services sector in the same way they do to the rest of the economy.

Vulnerable and disadvantaged consumers

4935706901_b556da82da_zThe Productivity Commission emphasised that policy makers need to pay attention to the needs of vulnerable and disadvantaged consumers. It argued that some of its recommendations would particularly benefit vulnerable and disadvantaged consumers, for example, its recommendations on strengthening credit regulation and prohibiting unfair terms.

Some of these recommendations have been implemented, however, vulnerable and disadvantaged consumers are still at risk. There has been the emergence of new business models targeting vulnerable consumers, including ‘credit repair’ businesses, and as well as continued poor selling practices to vulnerable communities. (See for example, the litigation against Excite Mobile ). More is likely to be needed. One possible addition to the legislative armoury is a prohibition against unfair trading, similar to that implemented in the European Community. Another option might be to introduce a product intervention power and/or a product design and distribution obligation: the Government has recently agreed to implement these changes to financial services regulation.

On a practical front, the Productivity Commission recognised that access to consumer advice, case advocacy, and policy advocacy is critical for vulnerable and disadvantaged consumers. However, this is one area where there has been little progress.

Supporting individual advocacy and broader policy engagement

The Productivity Commission recommended that governments should increase resourcing for legal aid and financial counselling services, and provide additional public funding to support a representative national peak consumer body and to assist the networking and policy functions of general consumer advocacy groups.

Progress on implementing these recommendations has been poor. In 2014, the Productivity Commission called for more government funding for legal assistance services, but this recommendation has not been acted upon and the community legal sector and financial counselling sector still report current or future funding cuts.

Support for engagement in policy issues similarly limited. In 2009, the Rudd Government released an Issues Paper on how best to support policy engagement, but there has been no formal government response to the consultation. There continues to be a deafening silence as far as government support for a national peak body for consumer advocacy is concerned, despite similar recommendations being made in other reviews. And the Commonwealth Government continues to impose restrictions on the extent to which community legal centres can use government funding for policy work, despite explicit support from the Productivity Commission for this activity.

Consumer research 

6219498045_547d47b249_oAnother issue on which there has been little or no progress since the Productivity Commission review is that of funding consumer research. The Productivity Commission recommended that arrangements should be developed to provide additional public funding to enable an expansion in policy-related consumer research, and comments on implementing this recommendation were sought in the 2009 Issues Paper mentioned above. While individual research projects have been funded by government agencies, it is not clear that there has been an increase in government support for consumer research. In any case, there is no obvious coordination of consumer research in a strategic way by Australian governments. The failure of the governments to act here is even more disappointing given the regulatory impact assessment requirements for proposed laws and for amendments to, or removal of, existing laws. It is often easy to demonstrate the costs to business of new laws; but can be much more difficult to estimate the costs to consumers of not regulating, or the benefits to consumers from regulating. A properly funded and coordinated research program can help here. There is a clear role for government here that is simply not being taken up.


The Productivity Commission’s Consumer Policy Review was a watershed document, and many of its recommendations have been implemented, to the benefit of Australian consumers. But there is still some unfinished business, and emergence of new problems that may not have been anticipated. The ACL review is definitely not a time for governments to rest on their laurels.

Nicola Howell is a Lecturer in the School of Law, Queensland University of Technology, a member of QUT’s Centre for Commercial and Property Law; and a member of the CFA Executive.