Page 2137 - Week 08 - Wednesday, 9 September 1992
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Codes can be used to particularise and clarify rights and obligations in specific kinds of transactions. They allow traders to know with some certainty what their fellow traders and the rest of the community think is fair in that particular marketplace. Because they are industry-specific, codes can more effectively stamp out unfair trading practices. For example, if a code were developed for health and fitness club memberships, it might require all traders to provide certain minimum standards of service. It might also prohibit certain kinds of unfair and misleading recruitment practices, such as lifetime memberships. Exactly what needs to be contained in such a code is the first challenge for the developers of a code. I look forward with interest to our first ACT code of practice which will meet the specific needs of the Territory's consumers and traders. As well as taking account of any conditions or characteristics peculiar to the local marketplace, codes of practice can be developed, implemented and modified reasonably quickly in response to new products or services, or marketing techniques.
I intend to adopt a number of guiding principles for the consultation process by which codes of practice will be developed. These will ensure that each code maximises the opportunity for industry and consumers to participate in its development and administration; provides adequate mechanisms for monitoring and reviewing its operation; contains appropriate complaint and dispute resolution mechanisms; is accompanied by adequate consumer and trader education; and, finally, does not contain any provisions which unnecessarily inhibit competition in the industry. I wish to stress that codes of practice are not a backdoor way of imposing additional legal obligations on traders. The procedures for making them ensure that they are subject to the scrutiny of the legislative process. In fact, the experience of code development in other jurisdictions shows that they are often subject to a great deal more critical analysis by the community than the legislation to which they are subordinate.
I also expect that, once operative, codes will need to be updated. The Bill requires that all but minor amendments to codes go through the same consultative process and receive the same scrutiny as if they were new codes. Once made, codes will need to be enforced. Because of the consultation process, I expect codes to have the general support of fair traders in the industry to which they relate. In line with the co-regulatory approach taken in the development of codes, the Government will be encouraging traders to include an appropriate dispute resolution mechanism in every code. To be used to their best effect, codes need to foster a cooperative approach to their enforcement. Therefore, traders cannot be prosecuted for breach of a code.
However, since there has to be an incentive to encourage recalcitrant traders to comply with the codes, there is a two-stage process for enforcing the code. In the first instance, where it appears to the Director of Consumer Affairs that a trader is not complying with a code, the director can ask the trader to make a written undertaking to do so. If a trader refuses to make an undertaking as requested, the director can apply to the Magistrates Court for an order that the trader comply with the code. If the trader makes an undertaking but subsequently breaches it, the director can ask the court to order the trader to abide by it. Consumers who have the authorisation of the director can also ask the Magistrates Court to order the trader to comply with an undertaking.
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