New consumer guarantees on services

On 1 January 2011, new national laws designed to protect consumers and ensure fair trading in Australia came into effect. Under the new Australian Consumer Law (ACL), consumers will have the same protections, and businesses have the same obligations and responsibilities, regardless of where they are located in Australia.

The ACL replaces the consumer protection provisions contained in the Trade Practices Act 1974 and the state and territory fair trading acts. The Trade Practices Act has also been renamed and is now known as the Competition and Consumer Act 2010 - the ACL is a schedule to this Act.

The ACL will be jointly enforced by the Australian Competition and Consumer Commission (ACCC), state and territory fair trading agencies and, where the law applies to financial services, the Australian Securities and Investments Commission (ASIC). Australian courts and tribunals can enforce the ACL, including those of the states and territories.

ACL introduces 'consumer guarantees'. Consumer guarantees are a comprehensive set of rights and obligations in relation to the supply of goods and services to consumers. Consumer guarantees are similar to current refund and warranty laws, but they more clearly set out the rights and obligations of both your business and the consumer.

Consumers are now automatically provided with consumer guarantees on purchases of certain goods and services. For purchases on or before 31 December 2010 previous fair trading laws will apply.

If you supply services to consumers, there are three key guarantees you must meet.

• Businesses must provide services with due care and skill - meaning they must use an acceptable level of skill or technical knowledge when providing services, and take all necessary care to avoid causing loss or damage;
• Businesses must also provide services that are fit for a particular purpose. As a service provider, you guarantee that any service you provide and any products resulting from that service achieve a consumer's stated purpose or desired result; and
• If the contract for the supply of services doesn't specify a length of time in relation to when the service is to be completed, you must provide the service, within a reasonable time. What is considered a reasonable time will depend on the nature of the service.

The ACL grants fair trading agencies more investigative powers and enforcement options, as well as providing for larger penalties should a business fail to comply with the law.

It is essential that businesses and legal practitioners familiarise themselves with the new legislation to ensure compliance.

State and territory fair trading agencies, together with the ACCC and ASIC, have developed a guide to assist businesses in meeting their consumer guarantee obligations. The guide explains all of the consumer guarantees, including when they apply, who is responsible for satisfying the requirements of each guarantee, and when remedies, such as a refund, repair or replacement will be available to the consumer.

Consumer guarantees - A guide for business and legal practitioners, along with other guidance on the ACL, will allow businesses to simplify their operations under a single, national law.

To get a copy of the guide, visit consumerlaw.gov.au or contact your state Fair Trading office.