The chamber says the move by CALC fails to prove that motor car traders made up a serious enough level of complaints to justify an ombudsman’s office and that CALC has not established that there was a “serious market failure”. 

It said that the Australian Consumer Law was doing its job of protecting car buyers but any delays and frustrations in the process flowed from the Victorian Civil and Administrative Tribunal which had become bogged down and expensive and was running 25 weeks behind in hearing cases. CALC says it can take up to two years for cases to be resolved. 

The VACC says that is not the fault of the dealers and is not a reason to expect them to fund an ombudsman to resolve issues bogged down in VCAT.

The VACC has instead offered to work with CALC to resolve the issues CALC raised in its approach to the government.

CALC provides free legal advice and pursues litigation on behalf of vulnerable and disadvantaged consumers across Victoria and is the largest specialist consumer legal practice in Australia.

CALC is telling the Victorian government that there is a need for a specialist dispute service to assist people who have been sold defective motor vehicles. 

It says that a specialist service to help resolve disputes when a defective ‘lemon’ car is purchased, along with the provision of a free, independent expert report, would solve a critical problem that hurts people and communities, and is a drain on productivity

CALC argues that Victoria needs a specialist no-cost or low-cost alternative dispute resolution scheme for motor vehicles that is accessible, affordable and timely. CALC points out that in Australia, the industry-based ombudsman model is well-established and highly effective in the field of energy and water, telecommunications and financial services. 

The VACC, which represents members of the Victorian Automobile Dealers Association and used car trader members, says that CACL has not established that there is a problem.

It says that a sample of claims taken over a week showed that only three of 121 VCAT cases listed were automotive related and there was no indication whether the auto complaint was related to a dealer or independent car trader, private internet seller, an auction or a trader who is not a member of the VACC.

The rest of the 121 complaints covered the entire retail sector.

Another sample of cases showed that only 1.49 per cent of 1204 applications to VCAT were relating to an LMCT trader.

The VACC says that the problem is not that the system is wrong, it is that VCAT hearings had over time become more complex and expensive and as a result the tribunal is running 25 weeks behind.

The VACC says the solution was not to appoint an ombudsman and add another layer of cost and bureaucracy for traders, but to concentrate on making VCAT more efficient.

The chamber also said that in making a pitch for an ombudsman to be added to the process of auto consumer protection, it was surprised to realise that CALC appeared not to be aware of the Motor Car Traders Guarantee Fund (MCTGF) which is run by Consumer Affairs Victoria.

The fund meets the cost of compensation to car owners whose claims against an auto trader have succeeded. Money for the fund comes from motor car traders’ licensing fees, and penalties paid for breaches of the Motor Car Traders Act

Claims for compensation from the fund are heard by the Motor Car Traders Claims Committee.

The fund famously paid out more than $1 million to car owners who were duped by a fly-by-nighter who sold their cars on their behalf but kept the proceeds of the sale and fled the country.

The fund made restitution to the owners but it was cleaned out and the dealers had to top it up again.

Meanwhile the VACC says it is looking at ways of working with CALC to ensure legitimate claims are dealt with fairly and quickly including a working group of CALC, Consumer Affairs Victoria and VACC to meet every four months to discuss issues of common concern in the retailing of vehicles.  

The VACC says that it is “as keen as anyone in the industry to get rid of rogue car traders” and wants to enter into constant dialogue with organisations like CALC and broker meetings with CALC and traders.

VACC said it has offered to co-fund marketing material with CALC to encourage consumers to be wary when dealing in private-to-private sales and “to debunk the theory that a bargain is always found when purchasing at auction”.

The VACC said it would also organise a face-to-face meeting with VACC and the Motor Car Traders Fund Chair to discuss how the fund works and participate in community engagement seminars with CALC.

The CEO of the VACC Geoff Gwilym told GoAutoNews Premium: “The issues that CALC have identified are very real, very unfortunate and we agree are very problematic for the consumer. They are certainly not representative of what we want from our industry. That’s a fact. 

“What is not a fact is that all dealers do this or that there is a crisis. 

“So what we said to CALC is that we have an empathy for you. We know the dealers who would be involved in these sorts of things. We know all used car traders. We know exactly who they are. 

“We said to CALC the problem is that putting a lemon ombudsman on the community is not going to solve that. You’re going to have those problems forever, unless you do something about those traders. And we told them they are missing an opportunity to do something about those traders by not using the fund (Motor Car Traders Guarantee Fund).

“If they are relying on the strength of the ACL and VCAT to fix their problems they are going to end up disappointed,” Mr Gwilym said.

CALC director of policy and campaigns, Tania Clarke, told GoAutoNews Premium said delays for resolution at VCAT are often up to two years and that “far too often accessing justice through the VCAT is expensive, slow and inaccessible without a lawyer”.

 Ms Clarke said: “We really felt that we needed to present a proposal to the Victorian Government and this year there is a sense of urgency, because it has just gone on for too long.

“This is not about the Australian Consumer Law but about how disputes are resolved and it is time to draw a line in the sand and stop the need for the disputes to continue. And consumers need a way of resolving these disputes,” she said.

By John Mellor and Neil Dowling