Submission regarding Treasury’s Unfair Trading Practices Consultation Regulation Impact Statement

29 November 2024

The Business Council of Australia (BCA) welcomes the opportunity to provide feedback to Treasury on the Unfair Trading Practices Consultation Regulation Impact Statement (CRIS).

The BCA recognises that a well-functioning market-based economy is supported by effective consumer protections, to support both consumer participation and competition. Australia has a well-established consumer protection framework comprising various regimes including the Australian Consumer Law (ACL) and other protections under the Competition and Consumer Act 2010 (Cth) (CCA), the Privacy Act 1988 (Cth), the Spam Act 2003 (Cth), and the Competition and Consumer (Consumer Data Right) Rules 2020 (Cth). There are also sector-specific protections, including for financial services, energy, telecommunications, private health insurance and others. Protections may take a number of forms from legislated protections to voluntary industry codes.

The combination of economy-wide and sector-specific protections provides for a comprehensive framework of protections for consumers and small businesses. This existing risk-based approach to consumer protection ensures consumers and small businesses are protected, while minimising the regulatory risks and uncertainty, in contrast to vague prohibitions that are dependent on court determination.

ACL already captures unfair trading practices included in other jurisdictions’ provisions including:

  • General protections – including misleading and deceptive conduct, unconscionable conduct, and unfair contract terms.
  • Unfair practices – including false or misleading representations, unsolicited selling, pyramid schemes, and other unfair practices including harassment and coercion.

The 2017 Australian Consumer Law Review noted that “the value of an additional general unfair trading prohibition is uncertain at this point in time” given the many existing protections in the ACL.

The BCA does not support the introduction of a general prohibition against unfair trading practices as the arguments in support of change put forward in the CRIS:

  • Lack clarity around the nature of the consumer harm that needs to be protected by a new prohibition.
  • Fail to demonstrate that the existing consumer protection framework (which includes the ACL and other consumer protections) is unable to provide sufficient protection to consumers.
  • Rely on subjective and undefined concepts of what is “unfair” which will in turn create substantial uncertainty and regulatory risk, and delays in resolution, which are not in the interest of consumers or businesses.
  • Conflate the level of consumer protection offered in different jurisdictions with whether or not there is a general prohibition against unfair trading practices. This assumes there is a ‘gap’ in protections afforded in Australia compared with other jurisdictions without any detailed comparison between equivalent regimes to determine whether this is in fact the case.
  • Fail to identify that the jurisdictions referred to in the CRIS (US, UK, EU and Singapore) do not have an equivalent punitive penalty regime to Australia’s ACL.
  • Do not account for differences in the nature of the regulatory regimes in some jurisdictions which are more administrative in nature (a model that is not replicated in Australia).
  • Do not account for overlapping reforms including the Australian Government’s commitment to reforming the Privacy Act, the introduction of the Scams Code and Consumer Data Rights.

Poorly targeted or ill-evidenced reform risks undermining consumer interests in the long term by:

  • Limiting the ability for consumers to quickly benefit from an unfairness standard because the protection is too vague. This will also hinder businesses’ ability to have clarity around what conduct will contravene the ACL or enable consumers to understand when they can enforce their rights. Ultimately, it would require a court to interpret, which will result in more uncertainty for many years as cases make their way through the courts.
  • Increasing the cost and complexity to businesses of delivering goods and services in Australia.
  • Chilling business investment and innovation which could lead to fewer products and services being made available in Australia. It is important that businesses can operate in Australia with confidence that the legal regime applies certain and predictable rules. BCA members have already indicated that piloting of products, delivery models and investment in new product options would be impacted by the regulatory uncertainty and risk of substantial penalties, under ACL, if a vague prohibition is introduced.
  • Reducing dynamism and competition as businesses become more risk-averse in response to increased regulatory and compliance risk.

Adding an uncertain prohibition (that will require clarity from the courts) to an already complex and comprehensive consumer law framework will only make Australia less competitive and less attractive as a destination for international capital. This is not only through the direct costs of bad regulation, but also by disincentivising existing businesses from investing and modernising their business models – either through new explicit regulatory barriers, or from the signal overregulation sends about government’s attitude towards innovation. This would be a very poor outcome. Australia’s future prosperity relies on businesses modernising and taking up new technologies and ways of doing business. Without this, we will be left behind.

Read our full submission here.

Share

Latest news


Submissions

Submissions

Submissions