ACCC boss takes a swing at bad big businesses

Consumer watchdog head promises stronger enforcement in 2017 and calls for harsher penalties for wrongdoers.

The head of the ACCC has thrown down the gauntlet to misbehaving businesses, promising stronger enforcement and calling for harsher penalties for breaches of the law.

Speaking at a Committee for Economic Development of Australia lunch, chairman Rod Sims outlined an ambitious list of priorities for the consumer watchdog to tackle in the coming year, despite its limited resources.

Sims said the biggest challenges facing the consumer watchdog in 2017 included misleading and deceptive practices, and anti-competitive conduct.

"Our market economy works badly when consumers are misled, when there are unlawful restrictions on competition, and when there are cartels," he said.

"Consumers feel aggrieved, for example, when they are lied to about products, when confronted with drip pricing and when consumer guarantees on goods and services are not honoured."

Private health funds put on notice

Sims has put private health funds on notice, saying that the ACCC will be "intensifying our focus" on the industry. The ACCC is currently pursuing action against Medibank in the Federal Court for allegedly failing to tell their members about reductions in their cover level, a practice Sims believes is "widespread" throughout the industry.

"The industry seems to think that provided it complies with health insurance laws – which are lengthy – that that's fine," he said. "We are seeing a number of companies that have changed policies without notifying people, and where there's been significant detriment caused we are going to take action."

"I think you will see a couple more private health insurance companies before the courts before the year's out, and hopefully that will get the message through."

Ensuring consumer protections in services

Sims said the ACCC is getting ready to "take consumer guarantees into more complex areas", including the new car market, telco service failures and – off the back of a CHOICE super complaint – the airline industry.

"CHOICE has raised with the ACCC several concerns related to the conduct of airlines. Some of these go to the application of consumer guarantees, appropriate remedies and getting what you paid for," he said. "These matters were already on our radar but the CHOICE complaint has reinforced our interest."

"It's great news that just two months after we launched our super complaint into the shonky practices of Australia's major domestic airlines, the regulator has decided to investigate," says CHOICE director of campaigns, communications and content, Matt Levey.

"From repeatedly informing travellers they have no refund rights to a lack of redress when flights are delayed and cancelled, domestic airlines have been flying below the radar for too long when it comes to consumer protection."

Big business: we've got our eye on you

Sims used the speech to reinforce his view that the ACCC's role is predominantly to keep an eye on big business, saying the best deterrent against bad behaviour is strong penalties for wrongdoers.

"In 2017 we will be making concerted efforts to ensure that the penalties we seek make larger companies and individuals who work in them consider their business practices, and how their business practices meet their obligations under competition and consumer law," he said.

He said it was encouraging to see the courts giving larger financial penalties to corporations, citing ACCC's successful appeal against Reckitt Benckiser's original fine for its "targeted" Nurofen products.

The ACCC's "well advanced" investigations into cartels and other anti-competitive conduct will also be ramped up, with more prosecutions expected this year. "Unfortunately, it's clear to me that the message is not getting through," said Sims. "I fear that only jail sentences for individuals in prominent companies will send the appropriate deterrence messages."

Other priorities

Country of origin labelling: "Over the next 16 months we will continue our education activities to support businesses during the transition period for new country of origin labelling laws. Consumers expect clear and truthful information about where their food comes from. They are indignant when they do not get this."

Lemon cars: Sims said car repairs need to be looked at not just under the manufacturer's warranty, but through the lens of the consumer guarantee: "How many times do you have to fix a transmission before it becomes a major fault?" However, Sims does not support lemon laws, saying the ACL provides adequate protections.

Broadband speed claims: The ACCC is working with government to introduce a broadband performance monitoring and reporting program, to "test speeds and see who is at fault [for substandard service]: NBN Co or the provider."

Commission-based sales: "This year we will be looking closely at misleading behaviour that may be driven by sales commissions including those paid to third-party marketing firms." Areas of concern include industries "that enjoy a high level of trust with consumers and where the existence of commissions may not always be expected. For example third-party marketing of charities and the supply of health services or associated products".