Consumers Transacting With Confidence

Hon Heather Roy address to the Australia and New Zealand Ombudsman Association (ANZOA) conference; the Holiday Inn, Featherston St, Wellington; Friday, May 7 2010.

Thank you, Claire, for that introduction and welcome everyone.  It's great to be part of this panel looking at Ombudsman offices and the services you provide.  There is a real breadth of opinion and experience, and mine is very much from a governance perspective.

My focus as Minister of Consumer Affairs is to promote an environment in which consumers can transact with confidence.
 
It is worth exploring that phrase.  "Consumers transacting with confidence" essentially means: consumers and suppliers have confidence in market rules; that a consumer purchases a product or service, their reasonable expectations are met; and that a consumer knowing that there is access to redress if reasonable expectations are not met.

Redress is available through the judicial system: the courts and the Disputes Tribunal.  But, increasingly, alternative dispute resolution is being provided either voluntarily by industries themselves - which is my favoured option - or required by regulations.

As some of you are aware, the New Zealand Ministry of Consumer Affairs is responsible for implementing and administering the financial services dispute resolution regime under the Financial Service Providers (Registration and Dispute Resolution) Act.

Under this regime, all financial service providers who offer services to the public must belong to a dispute resolution scheme.  The scheme may be one that has been approved by me as Minister, or it can be the reserve scheme being established by the Ministry of Consumer Affairs.

This regime, based on an alternative dispute resolution (ADR) or ombudsman scheme, is a new approach by Government to provide redress for consumers.  This approach is also being taken with the gas and electricity industries.  The Government has adopted this approach rather than the setting up an authority like the Real Estate Agents Authority - partly because the financial services industry already has two well-run ombudsman schemes, and partly because the Government sees advantages in ADR.

As well as providing for consumer redress the Financial Service Providers (Registration and Dispute Resolution) Act aims to improve market discipline.  An industry-based ADR regime helps to facilitate this - financial service providers are more likely to ensure that their service and business practices are sound, to avoid the costs of having complaints resolved and of any remedy or compensation.  Having the incentives in the right place encourages the right behaviour.

From my perspective as Minister of Consumer Affairs, the most significant value of ADR and ombudsman schemes is that they give consumers access to, and choice in the avenues for, redress.  Accessibility is one of the benchmark principles that guide ombudsman scheme practices.

Accessibility means the scheme's processes should be easy to use and have no cost barriers - they must be free to consumers.  Dispute resolution schemes usually use an informal, non-adversarial approach to dispute resolution; the process is simple to understand and use, and they help consumers with special needs, be they cultural, language, geographical or physical needs.  It is worth remembering that the people who have the most difficulty with accessibility to schemes of any nature are very often the people who most need assistance.

This is in contrast to the courts where the costs can be prohibitive and the procedure is usually very formal, lengthy and for some, intimidating.  However, the judiciary system has its place and is appropriate or a better avenue for some disputes.  I note that the Disputes Tribunal is in place to help consumers and small businesses particularly because of the compliance costs to them of using the District and High Courts.  ADR is even more accessible again particularly because it is so often has a facilitative rather than judicial approach.

Ombudsman schemes have expertise in the industry which they cover and their approach is to promote fair and just decisions giving regard to industry codes and the law.  ADR decisions may be more appropriate and relevant than those of the judicial system because of better knowledge of the complaint context.
 
For consumers, ombudsman decisions, if accepted by the complainant, are final.  This provides certainty for consumers, unlike court decisions, which can be appealed.

Speaking from a consumer perspective, there are no major aspects in which an Ombudsman might 'get in the way'.  Of course, there are scheme rules which may determine whether a complaint is accepted for consideration and limits the compensation awarded.  These sorts of rules will be a factor in complainants' choice of whether to take their complaint to an ombudsman scheme, Disputes Tribunal or the Courts.

I see that the Government's new approach to regulated dispute resolution will become a more preferred, cost effective and lighter-handed way to provide consumers access to redress in the future.  

I would like to share with you an initiative that I put in place when I became the Minister of Consumer Affairs.  My priority has been my 'One Law, One Door' initiative.  'One Law' is about taking the 11 pieces of consumer-related law that have evolved over time and trying to rationalise them, assessing and reviewing them for their relevance for today, where gaps exist, and how to future-proof the law as best we can.  We have two very good principles based laws - the Consumer Guarantees Act and the Fair Trading Act. A discussion document will be released soon for the purpose of public consultation. This initiative forms part of the Government Regulatory Reform process.

More relevant to the discussion today is the 'One Door' part of 'One Law, One Door', which is about having one portal or place to go when consumers have a complaint or need for information in relation to a transaction.  Many people in New Zealand - and I suspect it exists in Australia - don't actually know what an Ombudsman is, does, or where they might find one.  The challenge you face is letting people know you exist, telling them what your role is, and then having easy access your services.  Accessibility is one thing, but if people have no knowledge of that accessibility, then that accessibility itself becomes a moot point.

'One Door' is about making it easy for consumers to find the avenue they need when they have a transaction that has gone wrong.  When this happens consumers need to have the ability to take that a step further and have their case heard.  'One Door' is about matching those complaints with the right process.  This is no reflection of the very good schemes that exist.  I've been very impressed by the Ombudsman schemes here in New Zealand, and also with the disputes resolution schemes that exist.

But someone who has a great need, and not a lot of money or knowledge to deal with a problem themselves, has to be able to find the   advice they need and my intention is to have 'One Door' put them in touch with that process.

Thank you again for the invitation to speak to you today. In summary my job is to set the right environment and then step aside so that you Ombudsmen can get on and deal with issues as they need to be addressed.  From a consumer perspective, it is about having that ability to transact with confidence, but also about having the ability to do something positive about it if that transaction process has gone wrong.