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VACC wants general and specific bans on unfair practices to protect auto trades

NCR VACC

Victoria’s key auto trades advocacy body has continued its pressure on the federal government to update consumer law to protect automotive businesses.

The Victorian Automotive Chamber of Commerce made its submission to proposed federal government reforms to Australian consumer law to address unregulated unfair trading practices.

The VACC lists examples of unfair trading practices that can be inflicted on businesses and consumers that include nagging or exploiting businesses willpower to do something, obstruction or making tasks such as cancelling a service harder than it needs to be, hiding information relevant to a business decision and artificially creating urgency to pressure clients.

“Businesses can often face the same challenges as consumers when it comes to experiences of unfair trading. For instance, exploiting bargaining power imbalances in supply chain arrangements, including unilaterally varying supply terms at short notice,” it notes in its submission.

The VACC also wants the changes to ensure the protections against unfair practices are extended to all businesses rather than just small businesses that employ less than 100 people or have a turnover of $10 million, a definition too narrow for the automotive industry it argues.

The VACC has argued that leaving the law unchanged was untenable as business continue to suffer the impacts of unfair practices. It wants the existing “unconscionable conduct” to capture unfair conduct within the reformed laws.

“This policy option would seek to broaden the scope of sections 21 and 22 of the ACL to consider a range of misleading, harsh, oppressive, or predatory conduct depending on how unfair conduct is defined,” it wrote.

But it also argues that solely introducing general prohibitions will not be targeted enough to identify industries who potentially engage in specifically prohibited practices.

“The financial services sector, for example general insurers may require specific prohibitions, not only general prohibitions, as their failings were noted by the Hayne Royal Commission and various Productivity Commission reports in the motor vehicle insurance and smash repair sector,” it noted.

It is instead advocating for a combination of general and specific prohibitions that it notes have been adopted in the EU, UK and Singapore.

“This approach would involve prohibiting a specific list of types of conduct. Consumers and businesses would be clearly protected against the list of prohibited practices but would also have protection against unidentified or emerging unfair trading practices from the broader principles-based prohibition.”

For businesses the changes could mean greater obligations to revise compliance practices, and train staff but it would have the benefit of providing useful guidance along with new penalties deterring unfair conduct and securing redress when the laws are broken.

“Overall, the proposed options aim to balance the need to address unfair trading practices against burdening businesses with unclear or expansive new obligations.”

The next step involves treasury releasing a Decision Regulatory Impact Statement in 2024

VACC’s submission can be read here.

For further reading and information regarding unfair trading practices please see VACC’s summary document.

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