John Duffy: Consumer NZ Chief Executive comments on increased fines for breaching the Fair Trading Act

The Government is planning to increase fines for breaching the Fair Trading Act - from 600-thousand dollars to five-million.

It is announcing a swathe of changes to crack down on businesses and individuals breaking consumer laws. 

The cases could also be moved from the criminal court to the Civil Court to make prosecution easier. 

Consumer NZ Chief Executive Jon Duffy told Mike Hosking that it is one of the most consequential changes to the act in a generation. 

He says it will be a deterrent for many companies - but $5million is a drop-in-the-bucket for large multi-nationals. 

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Episode Transcript

Speaker 1 (00:00):
Change coming for those who reach the Fair Trading Act
fines will increase from six hundred thousand dollars to five million.
Cases are going to move from criminal to sibil. The
reason for that is it's easier prosecution, or so they claim.
John Duffy is Consuming New Zealand's Chief executive and with
us John Morning Morning, Mike, good move, great move, fantastic move.
What sort of move is it?

Speaker 2 (00:20):
It's pretty good. It's probably one of the most consequential
reforms of the Fair Trading Act in a generation. But
as with everything, it wasn't quite everything that consumer advocates
were looking for. But the changes to the penalty regime
very good, very pleased.

Speaker 1 (00:34):
Will it be a deterrant?

Speaker 2 (00:38):
I think so for more companies. There will always be
those companies, you know, big multinationals with deep pockets. Five
million dollars is still a drop in the bucket for
those types of companies. If you compare it to Australia,
there they're maximum penalties fifty million Australian dollars. But for
kind of medium sized and domestically located companies, this is

(01:00):
a serious deterrent.

Speaker 1 (01:01):
Yes, right, would you cite Australia as an example of
something that does work or not.

Speaker 2 (01:09):
Yeah, look, I think the regulator there has real teeth.
And that's not to say our regulator is not doing
a good job. It's to say that the AGEABRAC in
Australia is armed with the right tools, and they have
a broader range of tools beyond just big fines. They
can issue infringement notices, they have unfair contract provisions that
can be more easily enforced than the ones here in

(01:32):
New Zealand, so that there's a range of other tools
they have. But this will certainly help embold in our
commust commission we I think particularly the move from criminal
to civil.

Speaker 1 (01:40):
And so are these mistakes or is this deliberate behavior?

Speaker 2 (01:44):
In general, it can be both. But typically where you
have a business making a genuine error, they will have
a potentially have a defense under the fair trading active
of reasonable mistake and also sure that they might make
a mistake. They might have put out some misleading advertising
or something like that. Consumers may have suffered some instrument

(02:06):
typically that would be reflected in any fine that the
court imposed. They'd look at the circumstances of the case
and go, actually, this is at the mild end of
the spectrum. We're not going to give a five million
dollar fine. We might give something lower, but for that
really deliberate, intentional stuff, having a five million dollar fine
possible should be a real deterrent, all.

Speaker 1 (02:26):
Right, John, Appreciate it, John Duffy, who's the Consumer's chief executive.

Speaker 2 (02:29):
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