Under the Australian Consumer Law (ACL), consumer guarantee provisions provide remedies for consumers where a  product or service they purchase is faulty. The remedies available are repair, replacement or refund, depending on the nature and significance of the fault. There are also limitations to the type and value of products and services covered by the consumer guarantee. Most motor vehicles and related products and services are ‘covered’ by the consumer guarantee provisions.

There are concerns the current consumer guarantee arrangements are inadequate. There are limited enforcement mechanisms to ensure suppliers provide remedies to faulty products and services. While the ACL provisions outline the responsibilities of suppliers it does not include measures, such as civil penalties or infringement notices, to provide an incentive for suppliers to meet their obligations. It very much relies on the parties acting in good faith.

While the consumer guarantee obligations rest primarily with suppliers, there is a recognition in the ACL that manufacturers (and importers) have an obligation to indemnify (reimburse) suppliers where manufacturing faults are identified and suppliers provide remedies. However, as with the consumer guarantee provisions, there are very limited enforcement provisions.

Through a consultation paper, the Australian Government is seeking advice on measures to address these two issues – improving consumer guarantee remedy outcomes and the failure of (some) manufacturers to indemnify suppliers for the costs associated with providing remedies under the consumer guarantee provisions of the ACL.

With motor vehicles the subject of a quarter of all consumer guarantee complaints to the Australian Competition and Consumer Commission, they are a key focus of the consultation paper’s focus on improving consumer guarantee outcomes. Similarly, given the widely identified power imbalance between vehicle manufacturers and dealers in Australia, addressing concerns about indemnity arrangements in the industry are canvassed at some length.

The consultation paper provides options for dealing with both issues (and it is recognised there is a connection between them). It is worth noting that while the options identified could apply across the economy their specific, targeted application (including cost/benefit analyses) to the motor vehicle sector is discussed.

Member advice is sought to inform an MTA Queensland submission. The consultation paper includes a range of questions (clustered together at the front of the paper) to guide this advice. Members are welcome to provide advice on any or all of the questions posed in the consultation paper. ‘Real world’ examples that highlight concerns (or otherwise) with the current arrangements would also be very welcome.

To assist the preparation of an MTA Queensland submission, member advice should be sent to info@mtaq.com.au by 28 January 2022.