Consumer law reforms could bite

Robert Bycroft, a special counsel with Tompkins Wake lawyers, is warning of changes to consumer laws.

Bay of Plenty firms need to be aware that a wide-ranging reform of consumer laws with tough new penalties is looming that could affect their businesses, says Robert Bycroft, a special counsel with Tompkins Wake lawyers.

"At the moment, consumers are complaining about stuff even when they don't have legal grounds to do so," said Mr Bycroft, an expert on consumer law.

"Once the new law is enacted, they will have much more teeth to secure redress."

A raft of changes are expected from the Consumer Law Reform Bill, which has been through the select committee process and is awaiting to be enacted into legislation.

The Commerce Commission has begun work on developing the approach, process and guidance necessary to implement the changes. The commission's powers under the act will include being able to appoint a new team of inspectors with the power to levy spot fines of up to $2000.

"Our intention is that the commission will be well placed to enforce the new requirements," said Kate Morrison, the commission's general manager, competition.

"We will be providing guidance to businesses and their advisers on how to comply and will expect all businesses to comply by the date the new law comes into force."

Although the commission has said it expected the new law to come into force last month, Mr Bycroft said he thought it unlikely this would happen till at least next year, but it was proving difficult to get an idea of the proposed legislative timetable.

The new bill updates legislation which has been on the books for decades, primarily the Fair Trading Act of 1986, and the Consumer Guarantees Act of 1993, both of which were long overdue for updating, particularly given the changes brought about by internet trading.

"In 1986, no-one had heard of Trade Me," said Mr Bycroft. "The other thing is that New Zealand as a community now has a different attitude to consumer law issues. Following the enacting of the Fair Trading Act and the Consumer Guarantees Act, there has been a steady rise in public consciousness of consumer rights. Public expectations have increased."

The bill has been subjected to strong and in some cases successful lobbying, especially from the insurance sector, said Mr Bycroft. As with most legislation, he said, the devil would be in the details and it would affect businesses in different ways.

"If you are a small retailer that has never had a customer complaint and generally works in an honest and ethical fashion then a lot of this won't really affect you at all," he said. "If you are very much in the consumer space, and have a history of active consumer complaints, then you have to pay a lot of attention to this because you are going to get caned in many more ways than before, the fines increase and you can be banned from being in business."