Rod Sims

THE Australian Consumer Law is the driver to resolve customer issues with new-car complaints and operates separately from the manufacturer’s warranty according to the Australian Competition and Consumer Commission.

In Perth last week for a breakfast seminar organised by the Committee for Economic Development of Australia (CEDA), ACCC chairman Rod Sims said car manufacturers tended to ignore the Australian Consumer Law.

“Our concern is that vehicle manufacturers tend only to deal with consumer problems with new cars through their warranties, and do not have regard to the consumer guarantees in the Australian Consumer Law,” he said.

“Frankly, I am alarmed by the extent of non-compliance with Australian Consumer Law identified in our report in such a large industry by such large players.

“It is common for small companies to plead ignorance when they are notified of contraventions of Australian Consumer Law. Ignorance doesn’t wash for small companies and it certainly won’t wash for multinationals.

“There are two problems. First, within the warranty period manufacturers will tend to keep repairing vehicles even if, as we allege in the case of Ford, the vehicle repeatedly suffers the same fault.

“Second, beyond the warranty period, manufacturers tend either not to provide remedies, or to do so as an act of “good faith” when consumers may be entitled to a remedy under the ACL.

“We are seeking to change industry behaviour. And we are hoping a recent court enforceable undertaking we have accepted from Holden will set an industry benchmark. It provides an interesting industry counterpoint.”

Mr Sims was referring to the ACCC action against Ford for customer complaints relating to problems experienced with the dual-clutch transmissions fitted to some Focus, Fiesta and EcoSport models.

“In our proceedings against Ford, we allege that about half of the 70,000 vehicles sold had at least one repair relating to the PowerShift Transmission (PST),” he said.

“In response, from 2011 to May 2015, we allege that Ford generally refused to provide a refund or replacement vehicle to consumers, even after their vehicles had undergone multiple repairs that had not fixed the issue.

“In general terms, our concern expressed in our report is that vehicle manufacturers tend only to deal with consumer problems with new cars through their warranties, and do not have regard to the consumer guarantees in the Australian Consumer Law.”

Ford EcoSport

Mr Sims did not mention that Ford Australia had recently instigated a customer program to repair, reimburse or replace by pro rata, people affected by the PST problems.

He said that manufacturers of new cars appeared in the ACCC’s Top 10 most complained about traders in 23 of the past 24 months.

The response was the ACCC’s draft report of its market study report released last fortnight.

In it Mr Sims said the commission made three key observations:

• car manufacturers’ complaints handling systems and policies are preventing consumers from obtaining the remedies to which they are entitled under Australian Consumer Law
• a mandatory scheme should be introduced for car manufacturers to share technical information with independent repairers
• buyers of new cars need more accurate information about new cars’ fuel consumption and emissions.

“Two of these three issues are reflected in specific action we have pursued recently against Ford for alleged false or misleading representations and unconscionable conduct when dealing with customer complaints about faulty vehicles, and Volkswagen and Audi where we allege that these companies engaged in conduct liable to mislead the public and made false or misleading misrepresentations in relation to their diesel emissions claims,” he said.

“This latter case is well known and globally significant so I won’t say more, other than to note that the first stage hearing is listed for October this year to determine whether the vehicles had a defeat device installed.

“The Ford issue is less well known at this stage, but raises the issues relevant to our first observation.”

Ford Focus 2012

He also said that in the case of Holden – which had a similar problem with some faulty car models – that “it misrepresented to some consumers that it had discretion to decide whether the vehicle owner would be offered a refund, repair or replacement for a car with a manufacturing fault, and that any remedy was a goodwill gesture”.

“Holden has also accepted that some consumers were told that a remedy would not be provided because the vehicle had not been serviced by a Holden dealer or with sufficient regularity, or as the vehicle was purchased second hand,” Mr Sims said.

“Let there be no mistake: Australian Consumer Law includes consumer guarantees that provide remedies for major and minor faults in motor vehicles.

“Moreover, consumer guarantees operate separately from the manufacturer’s warranty, and cannot be modified to require consumers to have their vehicles serviced by authorised dealers in order to obtain a remedy. In other words, you are not bound to dealer servicing.”

Mr Sims said that Holden has accepted that its conduct was likely to have contravened the consumer law and has “offered an undertaking that goes beyond ensuring compliance with the current consumer guarantee obligations and commits to measures in line with recommended changes to the law”.

He said Holden has committed to:

• amend its dealer policies and procedures to ensure they comply with the ACL in relation to consumer guarantees
• engage an external reviewer to consider complaints since January 1, 2016, and provide a remedy to consumers where appropriate
• provide consumers with the ability to obtain information about any issues with their vehicle by contacting Holden and giving their vehicle identification number
• clarify its internal compliance training program so that multiple minor failures of a vehicle may constitute a major failure
• offering consumers who purchased a new vehicle a refund or replacement without the need to demonstrate a major failure, if a defect prevents a vehicle from being driveable within 60 days of the date of purchase.

“These are great commitments and will have a significant and positive impact on consumers.

“We hope it will raise the bar for manufacturers and, I hope, community expectations.”

OEMs to provide data

ACCC chairman Rod Sims has told a large group of guests at a breakfast seminar in Perth that problems remain with OEMs providing technical service and repair information to independent repairers.

He said that this was despite a voluntary commitment made by car manufacturers in 2014 to provide independent repairers with the same information to repair and service new cars that they provide to their authorised dealers.

“Manufacturers have the ability to limit competition in the repair and service sector by controlling access to the technical information required to repair and service cars,” he said.

“Car manufacturers have an incentive to limit this access to steer service work to authorised dealers.

“Some manufacturers’ logbooks and service manuals also contain misleading statements that a new car needs to be serviced at a dealer to not void the warranty.

“The ACCC’s review of logbooks and service manuals found a number of representations that are likely to contravene the ACL.”

Mr Sims said that the view of the ACCC is that manufacturers should be required by a mandatory scheme to share the same technical information with independent repairers that they provide to dealers on commercially fair and reasonable terms.

“Independent repairers need access to electronic information and data produced by manufacturers to properly repair and service new cars and to efficiently and effectively compete in the sector,” he said.

“A lack of competition in this sector hurts new-car buyers who have fewer options to get the best deal for repairs and servicing.”

Mr Sims said Australia was not the only country to have faced this issue.

“In the US and the European Union, mandatory schemes have been introduced to require manufacturers to share technical information with the independent sector. Other jurisdictions are also looking to follow suit.”

By Neil Dowling