The Challenge of Creating a More Fair and Informed MarketplaceConsumer Affairs
Sheraton Hotel Auckland
Ladies and gentlemen, thank you for inviting me to address your conference.
When I looked through your conference programme, I was interested with the range of topics for discussion.
Consumer Affairs is a dynamic area. and today we are faced with a rapidly changing environment to an extent I do not believe has been experienced before.
We have seen an enormous change in the way retailers and consumers participate in the marketplace for example with the introduction of electronic commerce and banking.
I have chosen today to talk about the challenges of creating a fair and informed marketplace.
As representatives of major and multistores, you all have a key role to play in helping to achieve a fair, and particularly an informed marketplace.
One of the most interesting aspects to my portfolio responsibilities is in looking more closely at the issues and highlighting the benefits of our consumer protection legislation.
New Zealanders have always prided themselves on ingenuity and being on the "leading edge" and I do believe that our legislation does indeed lead the world in this area.
The legislation has been in force for sometime, and I am increasingly concerned about the apparent lack of information and understanding among consumers about it.
This must surely impact on your businesses too.
The marketplace has become increasingly competitive, and expectations of consumers and businesses have also increased.
It is a challenge to ensure that a balance is achieved.
The Ministry of Consumer Affairs must play a key role in ensuring that a balance between the rights and interests of consumers and those of businesses is maintained.
What I look for is a win-win situation.
Competitive markets are considered the best mechanism to achieve an environment where both business and consumers enjoy a win-win situation.
Having winners and losers inevitably creates further problems and expense, particularly in the area of disputes resolution.
I personally believe that education and self-regulation are options which can in the majority of issues, achieve the most positive results.
I am a supporter of Codes of Practice developed by industry associations, which not only serve as a benchmark for quality and service within a sector, but also inspire confidence for the consumer.
Such Codes of Practice can become invaluable benchmarks and an easy recognition of meeting a particular standard.
But they must also continue to be revised and updated to meet the changing demands of the marketplace.
Not only that, but within such codes there can be a disputes resolution process which helps both the business and the consumer.
We already have some very good examples of Codes of Practice emerging, the most recent being those currently developed by the electricity industry.
In the area of electronic commerce, I have been seeking some form of protection to ensure that consumers can seek across-border redress.
The OECD is now developing a project to generate consumer protection guidelines.
I understand one guideline may be to promote the development of industry-driven initiatives on electronic commerce.
Self-regulation can occur at either individual or industry-wide levels.
And I do think that it is in the interests of all retailers to provide service and products which not only enhance customer loyalty but ensure business reward through positive "word of mouth" promotion.
No amount of advertising can beat these key aspects.
And I say that from my personal experience of being a business woman operating my own company.
But it is also in the interests of good business when attending to disputes.
Many complaints received by my office, in my view, should never reach my desk, if the business involved had undertaken fair and reasonable discussions with the consumer.
But on the other side of the issue, is my very real concern about education and information.
Despite the best efforts by my Ministry, I still see a huge gap in people's understanding and knowledge of consumer laws.
So I say to retailers, you need to know thoroughly the responsibilities you have under our laws.
And that means ensuring your staff know and understand too. For they are in the front line and need to deal confidently with consumer issues.
That also applies to consumers, because I know at times, there are unreasonable expectations of businesses by some consumers.
For example, some consumers think it is their right to return a product that they have decided they don't like.
Under the law, they have no right to do so just because they have changed their mind.
Frequently, the business does assist by offering to change the item for another of the customer's choosing - more for good public relations than any requirement by law!
This is a good thing but care needs to be taken to indicate to consumers that this is better than a legal settlement.
Education could prevent this kind of situation.
I would like to seek your views on my suggestion that we find a way to develop a joint-venture between retailers and my Ministry to improve the knowledge and understanding of consumers about their rights.
To my mind, accessing such information would, in the long-term, save a lot of time and effort involved in dealing with customer complaints.
The joint-venture could encompass a specific education campaign or maybe we could develop an information kiosk approach where consumers can use a computer screen to access user-friendly advice and information.
Barry Hellberg does see me regularly to discuss consumer issues and I am sure he could bring to me your thoughts on my suggestion.
Certainly, the Ministry is changing it's focus from a centralised information system to one that is community based.
The new Consumer Information Service was recently launched.
We are targeting in particular, low income, Maori and Pacific Islanders and the traders dealing with these groups.
I also have additional policy areas which are currenlty being worked through.
The first is product safety.
Self-regulation and education are the Ministry's primary tools in dealing with a product safety issue.
In the majority of product safety cases, we have exceptional supportive and immediate responses from retailers and manufacturers.
The Ministry recently released a policy discussion document discussing mandatory versus voluntary product safety standards.
As a result of an investigation into the safety of prams, I decided to hold a forum on the safety of infant products to determine how we could better ensure that parents as well as manufacturers and retailers, can have confidence in the safety of such products.
I expect a discussion document outlining the issues raised at the forum to eventually be released.
The next area I am concerned about is consumer credit legislation.
Consumer and community groups consider credit to be the most widespread and severe of all problems faced by consumers.
Problems with credit do have severe consequences.
Low income consumers are especially vulnerable and they are least likely to be able to afford appropriate redress.
Existing credit law in New Zealand is unclear, inconsistent and therefore unfair.
It is complex, with different standards for different credit contracts.
It is not easily enforced and there is evidence of widespread non-compliance.
Changes relating to repossession's are outlined in the Credit (Repossession) Bill 1996 which is currently before the Commerce Select Committee.
I am aware that my predecessors had promised major credit reform and this has not happened.
I hope to have the opportunity to consider and discuss the issues with various groups and also with my parliamentary colleagues.
I know that as retailers, you will have formed views from your business dealings with credit issues and I would welcome any issues and concerns you wish to raise.
Another area of interest to you is our intention to investigate whether corrective advertising orders could be heard in the District Court.
Currently, a court order to correct misleading or false information can only be made in the High Court.
Direct and distance selling is also beginning to come to the fore as technology eliminates the need for consumers to visit a retail store.
It is an exciting and innovative area with many challenges and positives for consumers and business.
The review of the Door to Door Sales Act 1967 discussion document was released in 1995.
Earlier this year, the Ministry decided to separate the direct and distance selling issues.
The distance selling issues have been incorporated with electronic consumer issues.
I am hopeful that both papers with recommendations will be completed by the end of this year.
I also understand that concerns have been raised over the cost of compliance and consumer legislation.
I do not personally believe the legislation needs review. The Ministry continues to monitor the impact and results of the legislation and currently we have no plans to undertake a formal review.
Again, I think many of the issues raised by business can be better addressed through education and information and explaining how the Acts can apply and be defined.
I do not think a solution is to amend the legislation at this stage.
Certainly in terms of compliance costs, a review is already underway within the Ministry of Commerce to examine the costs to business of complying with government regulation.
I note that one aspect of the review is to look at "Best Practice Policy Development" and one of the areas under this section is increasing awareness of best practice approaches, such as educational initiatives.
In conclusion, I know that New Zealand has made considerable progress in working towards a more fair and informed marketplace.
Through our consumer protection legislation there is considerable goodwill among retailers to ensure we have a win-win situation for businesses and consumers.
As I have outlined, there is still more work to be done in meeting the challenges of creating a more fair and informed marketplace.
I believe that in raising consumer awareness through education, we will see benefits for both retailers and consumers.
My thanks for this opportunity to talk to you today.