Michael Hill says layby may have to go

Michael Hill says the bill needs to make it clear that retailers can charge a fee to cover layby costs. Photo / Doug Sherring

Jewellery retailer Michael Hill International says it may stop offering laybys if legislation proposed by the Government is passed in its present form.

In the company's submission on the Consumer Law Reform Bill, chief financial officer Phil Taylor said the bill was unclear on whether administration fees could be charged to customers using the service to pay for goods.

He said Michael Hill charged a $15 layby fee.

Laybys might seem like an old-fashioned payment method, but Taylor told the Business Herald there was still demand for the service.

However, he said laybys incurred costs for Michael Hill because staff had to spend time reconciling payments and calling customers about late payments. It was also costly to have inventory sitting around in stores, the layby on which could be cancelled at any time, he said, adding that the company did not charge cancellation fees even though it was entitled to do so.

In the submission, Taylor recommended amending the bill to make it clear that retailers were allowed to charge a fee that recovered the costs associated with layby sales.

If Michael Hill stores were unable to recoup the costs the company would be unable to continue offering the service, he said.

"There are significant benefits to customers in purchasing goods on layby and, therefore, [Michael Hill] would like to continue to offer this service."

Taylor said laybys allowed customers to buy items they would be unable to afford in a single payment without having to obtain credit and pay interest.

The Consumer Law Reform Bill enjoys strong cross-party support and is expected to be passed into law this year.