07 September, 2018
Spruson

Changes to Australian Consumer Law: Substantial Increase in Financial Penalties

Changes to Australian Consumer Law: Substantial Increase in Financial Penalties

On 23 August 2018, Parliament passed legislation amending the Competition and Consumer Act 2010 (Cth)(CCA). The amendment increases the maximum financial penalties under the Australian Consumer Law for provisions including unconscionable conduct, false or misleading representations, unfair practices (such as bait advertising), supplying banned consumer goods or services, and breaches of safety standards. The amendment will take effect shortly, following Royal Assent, and will apply to conduct on or after the date of commencement.

As a result of the amendment, the maximum penalty for individuals increases to $500,000 (from $220,000). A company, for each contravention, may be liable for maximum penalties the greater of:

  • up to $10 million (increased from $1.1 million); or
  • up to three times the value of the benefit received from the contravention; or
  • if the value of the benefit cannot be calculated, 10% of a company's annual turnover in the preceding 12 months.

The amendment puts into effect the recommendations of Consumer Affairs Australia New Zealand from early 2017, as part of the Australian Consumer Law Review, to bring the penalties in line with the current maximum penalties for contravening the competition provisions under Part IV of the CCA (such as cartel conduct for price-fixing and bid-rigging).

Rod Sims, Chair of the Australian Competition and Consumer Commission (ACCC) states that: "Penalties need to hit the bottom line so they are not simply seen as the cost of doing business. Perhaps more important, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority.”

The substantial increase in financial penalties means that companies “now face more serious financial consequences” for breaching the Australian Consumer Law, according to ACC Chair Rod Sims. Accordingly, companies, even more so now, cannot afford to take a relaxed approach to their obligations. It is important that relevant company compliance, risk and enforcement handling policies are in place and align with the obligations imposed by the Australian Consumer Law. Those policies should be reviewed frequently, kept up to date, and properly communicated to all relevant personnel.

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