2012 was an eventful year in consumer policy. Significant reforms were announced, legislated or implemented. We’re particularly excited about some important improvements that have directly flowed from effective consumer advocacy campaigns. But there are a number of ongoing and emerging issues that need consumer policy attention.
Communications
The year got off to a great start with the success of the Number Woman campaign. For years mobile
phone users have been charged high time-based charges when dialing 1800 and 1300 numbers, whereas landline users pay nothing or the price of a local call. A consumer campaign led by CFA member ACCAN led to the Australian Communications & Media Authority (ACMA) committing to amend the law so calls from mobiles to 1800 numbers and 13/1300 cost no more than a caller would expect to pay from a fixed service. Consumers, especially vulnerable customers with no access to landlines, will still be ripped off for the next couple of years, but at least the rip-off is scheduled to end by January 2015.
The new Telecommunications Consumer Protection Code came into force on 1 July 2012. It’s much improved on its predecessor. It now provides for disclosure rules that should help consumers monitor their usage, avoiding unexpected charges. For full details see New rules for telecommunications providers, but tougher enforcement needed.
We’re yet to see whether the changes to the Code will cut into the number of complaints going to the Telecommunications Industry Ombudsman, but we were delighted when industry finally agreed to reform the governance structure of the TIO.
During the year, the government appears to have abandoned the controversial Internet filter proposal, a move generally welcomed by industry and consumers alike. The offensive material the government wants to get rid of is no doubt appalling, but the filter was simply not going to work, and would impose significant costs on consumers and businesses for no return.
Financial services
The Future of Financial Advice legislation became law in June 2012 and will come into force on 1 July 2013. Among many improvements, the FoFA reforms will help professionalise the financial advice industry, help ensure advice is truly in consumers’ interest and outlaw and better regulate some of the worst charging practices including trailing commissions and asset based fees.
Insurance reforms include the addition of key fact sheets to Insurance Policies to allow consumers to understand the extent of their coverage more easily and reforms that assist in improving the consistency of coverage offered by Home and Contents Insurers.
In October, government announced a substantial one-off grant to seed fund a Superannuation Advice and Advocacy Centre, with matched industry funds paid into a trust to preserve the Centre’s independence.
In November, Federal Minister for Human Services, Senator Kim Carr, announced an inquiry into Centrepay – a useful service for low-income consumers but one that has been used by unscrupulous traders to facilitate consumer rip-offs. Financial Counselling Australia and others have been calling for reform for many years.
Another highlight in November was the RBA announcement of limits on credit and debit card surcharging, including an end to the Cabcharge rort, reforms sought by CHOICE and others for many years.
Credit reforms from 1 July 2012 are designed to stop credit providers offering unsolicited credit card limit increases, require that all credit card statements show consumers the effect of only paying the minimum amount and, for new cards, require the lender to allocate payments to the highest aspect of their credit card debt first.
Legislation passed during 2012 will protect the term “financial counsellor” and “financial counselling” from use by those who offer for profit service from 1st March 2013.
On 1st December, ATM fees in 76 remote locations became fee-free as the result of arrangements between the ACCC and a number of banks.
Door to door marketing
The Do Not Knock campaign seeks to protect consumers from unwanted sales pressure in their homes.
One year after the launch of the donotknock.org.au website in November 2012, CFA member Consumer Action had distributed more than 200,000 stickers, working through 106 partner organisations. In September, the Federal court recognised the legal effectiveness of the Do Not Knock sticker – that a trader ignoring the Do Not Knock sticker is in breach of the Australian Consumer Law.
Regulator action
It’s pleasing to see that key regulators ASIC and ACCC were very focused on effective enforcement action during 2012. Highlights included ASIC court action against debt collector ACM, and the ACCC taking proactive action against illegal conduct by door-to-door marketers and launching successful actions against energy switching sites for misleading consumers. We welcome ASIC increasing its transparency by providing better and more frequent reports on its enforcement activity, and some of its succesful enforcement action including action against a major wealth adviser.
Food
Good results for consumers in the food area are a bit thinner on the ground. The ACCC decision on free-range eggs was a step in the right direction.
In December, Ministers agreed on some restrictions on the foods that can be subject to a health claim; the regulation of the claims themselves is a lot weaker than desirable.
Energy
By the end of 2012 energy had become an even hotter and more confusing topic. Prices were up and so were tempers; there was plenty of action but little clarity about what it all means. But a few things are definitely moving in the right direction.
- The massive overspending on ‘poles and wires’ – the ‘gold plating’ discussed so often in the media – has finally come to attention after being the main driver for energy price increases for several years. While consumers will never get back the money that has been overspent, current debate at least focuses attention on both how to slow that spending and how to promote reductions in peak use to reduce the need for it.
- At the technical end of the debate, consumers welcomed the Energy White Paper which proclaimed “delivering better energy market outcomes for consumers” as one of four top policy objectives. There have been positive changes to the energy rules issued by the Australian Energy Regulator, and consumer groups have welcomed the review of the Limited Merits Review system and Changes in the governance structure of EWON – the Energy and Water Ombudsman for NSW.
- The Senate Committee on electricity pricing and the Productivity Commission inquiry on Electricity Network Regulatory Frameworks both supported the establishment of a national energy advocacy body; COAG decisions made in December will lead to a form of improved advocacy, but more can be done to get national advocacy right.
New Standards
2012 has seen the introduction of a number of important new standards, and work has commenced on a multitude of issues.
In particular, 2012 saw important improvements designed to protect children, with new standards introduced to regulate in door play facilities, water inflatables, and revised standards on swimming pool safety.
Living in a country which has one of the highest levels of UV radiation in the world, the release of improved sunscreen standards will play an important role in giving us access to better products. It has set a new benchmark raising the SPF limit from 30+ to SPF 50+; has world leading requirements on water resistance levels; and a crackdown on banning misleading labelling terms such as “waterproof, “sunblock” and “sweat-proof”.
On a broader level, the introduction of three national forensic standards in September has led Australia to take a lead role in establishing forensic standardization across the globe, in addition to Australia taking a lead role in the world’s first international compliance standard.
New Standards Australia committees have been active this year on a number of issues, including road lighting; complaints handling; dishwashers, clothes washers and dryers; energy audits; water efficient showers and developing sustainability criteria for bio-energy.
But it wasn’t all progress
While there’s a lot to be pleased about in terms of regulatory, industry and market change, it’s not all roses.
We’re very concerned about the continued increase in Telco complaints and in the number of energy disconnections. While increases in complaints to FOS are at least in part explained by the welcome extension of FOS jurisdiction to hardship matters and the impact of floods on insurance claims, there is a worrying underlying change nevertheless; there are probably too many hardship matters that get to FOS which ought to be resolved by banks and other credit providers earlier in the process.
Consumer groups were very disappointed with the recommendations of the St John review into a proposed last resort compensation scheme in the financial service sector, and remain disappointed by the slow progress on front of pack food labeling and the persistence of discredited daily intake labelling, the less than perfect response to the harm caused by high cost short term (payday) lenders and the inability of policy makers to devise improvements in consumer protection when buying and using gift cards.
While we welcome the funding for consumer advocacy in superannuation and the ongoing discussions of improvements to energy consumer advocacy, we’re disappointed that the Commonwealth has for several years running failed to implement the Productivity Commission’s repeated recommendation to provide ongoing funding for general consumer advocacy and research.
Energy issues
Confused thinking around privatisation and smart meters in response to energy price concerns us, as does the inability of government to think outside the square on solutions to energy pricing and to instead focus on spin rather than analysis and substance.
Decreasing customer service standards are overwhelmingly energy market related (EWOV complaints in 2011-2012 are up 18% over the previous year, involving 63,998 cases). This suggests that letting the market rip as they have done in Victoria is not the full answer – or even a very important part of it – to fixing energy prices.
Rising electricity disconnections, and the increasing gap between the amount of government assistance and low-income households’ bills, is putting pressure on low income and impoverished households.
Market Changes
The impact of portable digital devices on many markets continues to accelerate. 50% of Australians now own smart phones and Internet access by phone or tablet has more than doubled to 18% in the 9 months to late 2012. Whether this is the ‘new renaissance’ that some have claimed or merely extraordinary change is yet to be seen. At any event, as famed Internet observer Mary Meeker puts it, we’re now seeing ‘the reimagining of everything’.
More locally, there’s a steady rise of various forms of “collaborative consumption” and new ways to access spare capacity at good prices – from car sharing schemes through textbook rental to couch surfing and its more sophisticated siblings.
And here’s a few more things to worry about
We plan an article soon identifying the key priorities for the government in the coming years – but as a teaser here’s a few things to worry about
- unfair pricing supported by geo-blocking and other unfair ways to manage intellectual property
- credit repair companies,
- travelling salespeople that prey on the vulnerabilities of disadvantaged people in remote areas, many of them Indigenous.
- the ongoing problems with the Aboriginal Funeral Benefits Fund
- growing rates of financial exclusion (but we are impressed with research into the causes and how to address them by NAB and the Centre for Social Impact)
- the risks to consumers in the significant trend to self-managed superannuation
- low levels of confidence in the financial system leading to more opportunities for financial industry fringe players and fraudsters
- gag clauses imposed by some governments on service provider organisations – those that actually know what is happening to less advantaged members of the communities.
We are interested in your views on this eventful year! What do you see as the big success or disappointments of the year in consumer policy?