The Future of Consumer Law The perspective from a small island state

1
The Future of Consumer Law The perspective from
a small island state

• Paul Edgar Micallef
• 25th April 2006

2
Consumer law in Malta some considerations

• Limitations because of size geographical
  position
• Not enough discussion to adopt structures suited
  to specific needs of Malta
• Shortcomings
• Overall regulatory framework
• Enforcement tools
• Lack of specialised tribunals
• Aspects of substantive law e.g. after-sales
  services

3
The influences on Maltese Consumer law

• Maltese Legal tradition a mixture of
  continental civil law anglo-saxon law
• Since 1990s bulk of consumer law has been EU
  related
• Some measures implemented not EU inspired e.g.
  Consumer Claims Tribunal, pyramid schemes, rights
  for consumer associations
• Consumer Affairs Act as amended in 2000 has the
  high point been reached?
• Impetus for change post-2000 tied with EU related
  measures

4
The impact of the EU

• Overall positive impact of EU on Maltese consumer
  law
• Instances where Maltese law went beyond EU
  minimum measures
• Unfair terms
• Sale of goods
• Timeshare
• A step backwards - limitation on Member States to
  introduce pro-consumer measures beyond those
  stated in directives
• May mean that consumer lobby in Malta has to
  fight a rearguard battle

5
Consumer law in Maltathe story so far

• Prior to the 1980s consumer law had no identity
  of its own
• Consumer related issues dealt with under various
  laws notably
• Civil Code torts/quasi-torts, obligations
  rights of buyers sellers, letting hiring
• Weights Measures Ordinance,
• Food, Drugs Drinking Water Act
• The 1980s the first consumer laws
• Consumer Protection Act 1981
• Trade Descriptions Act 1986
• Door-to-Doors Salesman Act 1987

6
The story continues

• White Paper in 1991
• An executive Consumer Protection Council
• Enactment of laws on unfair terms, product
  safety, advertising etc
• Small Claims Court
• A consumer code
• Consumer Affairs Act in 1994
• An executive director
• An advisory Consumer Affairs Council
• Rights for recognised consumer associations
• Consumer Claims Tribunal

7
And continues

• The Amendments in 2000
• Declaration of principles
• Unfair practices (unfair terms, advertising
  schemes)
• Product liability
• Sale of goods to consumers
• Compliance orders
• Doorstep Contracts Act
• Amendments to Malta Travel Tourism Services Act

8
Other consumer laws enacted

• Under the Consumer Affairs Act
• Distance Selling Regulations
• Consumer Affairs Act (Price Indications)
  Regulations
• Consumer Credit Regulations
• Product Safety Act
• Package Travel, Package Holidays and Package
  Tours Regulations
• Protection of Buyers in Contracts for Time
  Sharing of Immovable Property Regulations
• Timeshare Promotion (Licensing of OPC
  Representatives) Regulations
• Distance Selling (Retail Financial Services)
  Regulations

9
Regulatory framework shortcomings

• Director of Consumer Affairs (DCA) with a general
  remit specialised regulators for different
  sectors
• Shortcomings
• Overlap between Director sectoral regulators
  not always clear which is the competent authority
• Reliance of sectoral regulators on Director to
  enforce consumer law, in those instances where
  regulators lack powers to intervene
• Lack of pro-active regulatory action to protect
  consumers

10
Addressing these shortcomings

• Criteria each issue to be investigated by that
  authority best informed resourced, whilst
  having necessary tools at law
• 1st Option MoUs between DCA each regulator
  PLUS each regulator is designated as a
  qualifying body under Consumer Affairs Act
• 2nd Option empower regulators to have concurrent
  powers with DCA under Consumer Affairs Act
  (compliance orders, public warning statements,
  undertakings etc.)

11
Enforcement of consumer law

• Enforcement tools under Consumer Affairs Act
  scarcely used why?
• DCA inadequately resourced lacks flexibility to
  act autonomously - focus is on education
  advising on complaints
• Enforcement tools include
• Public warning statements
• Undertakings to comply with obligations
• Issue of compliance orders
• Non-compliance is punishable as a criminal
  offence means prosecution before ordinary
  courts with onus to prove case beyond reasonable
  doubt

12
Changes to the enforcement regime

• Issuance of undertakings should be extended to
  all laws enforced by DCA
• Introduction of administrative fines regime in
  cases of non-compliance
• Criminal sanctions retained for serious cases
  (e.g. safety issues, excessive fraudulent cases,
  threatening DCA when exercising duties)
• Any such changes must be complemented with
  political commitment to strengthen human
  financial enforcement resources of DCA

13
A new regulatory framework?

• Approach is to copy regulatory structures adopted
  in larger jurisdictions
• Draft Bill in 1998 called for an Authority for
  Fair Trading and Consumer Affairs, included
  proposal to appoint regulators to deal with
  specific issues/sectors
• Focus regulation of consumer competition issues
  in one authority acting autonomously?
• Advantages a single reference point, no overlap
  plus available human and financial resources
  concentrated in one body
• Difficulties dismantling of existing structures,
  wide-ranging amendments to various laws

14
Taking matters forward the not-too-distant
future

• DCA Consumer Affairs Council merged in one
  umbrella organisation
• A Consumer Competition Authority with executive
  directors reporting to it
• Board of the Authority answerable to Parliament
  appointed by President
• Cardinal principles underlying new body
• Visible autonomy from all stakeholders including
  Government
• Clarity of jurisdiction, minimising conflict of
  jurisdiction with other regulators
• Effective enforcement tools

15
The Consumer Claims Tribunal a partial success?

• Decides consumer vs trader disputes where
  monetary value is under Lm 1500. Disputes decided
  according to equity substantive merits
  justice
• Informal procedure low costs
• Limited right of appeal decisions can be
  enforced as if given by an ordinary court
• Backlog of cases currently only one arbiter
• Enforcing tribunal decisions proving to be a
  deterrent to consumers
• Possible solution simplify court paper work,
  minimise dependence on lawyers, provide support
  from court staff ensure that court expenses are
  proportionate to amounts being recovered

16
A specialised tribunal ?

• Ordinary courts deal with following litigation
• Breach of consumer law which constitutes a
  criminal offence
• Contestation of a decision by DCA (e.g. issue of
  a compliance order)
• Disputes between consumers traders where value
  exceeds Lm1500
• Should there be a specialised tribunal? If so how
  should it be composed? What cases should it
  determine? Should it also deal with competition
  issues? Should its remit extend to decisions
  taken by utility regulators?
• A new tribunal? Ideally avoid creating a new
  forum with over 100 tribunals already in place

17
A changed Commission of Fair Trading ?

• Commission is composed of a magistrate, economist
  accountant
• Propose extending its remit to litigation under
  consumer law, including decisions by DCA
  disputes over Lm1500 which relate to consumer law
• Its composition to be revised UK Competition
  Appeal Tribunal could serve as a model members
  of the Commission to be chosen from a panel of
  experts according to the issues in dispute
• In the longer term such a changed Commission
  could assume role of the Appeals Boards under
  Cap. 418 and Cap. 423

18
Rights of Consumer Associations has enough been
done?

• Registered consumer associations enjoy
  substantial rights e.g. protection when making
  public statements, right to request issue of
  compliance orders etc
• Lack of financial human resources means that
  associations are not in a position to exercise
  these rights
• Some proposed changes
• Reduction or exemption from court fees incurred
• Creation of a fund consisting of fines collected
  from those who act in breach of consumer laws

19
After Sales Services

• Is a major source of complaint
• Existing provision requires traders in the case
  of goods that require maintenance or possible
  replacement to provide such services/parts for
  a reasonable time. Trader can release himself
  if he advises consumer in writing beforehand of
  unavailability
• No norms establishing minimum period guaranteeing
  quality of work when repairs are done
• No specific period stating for how long parts
  must be available
• No norms requiring a written estimate before
  repairs are undertaken

20
Implementing the Unfair Commercial Practices
Directive the immediate future

• Implementation of directive means that Consumer
  Affairs Act needs to be amended
• Is an opportunity for Government to review
  consumer law particularly to improve on
  existing enforcement tools
• Regrettable that Member States have no faculty of
  departing from measures in directive if they wish
  to include more favourable measures
• Short to medium term consultative document
  outlining proposals including implementation of
  directive, after sales issues, revision of
  sanctions overlap of roles between DCA
  regulators
• Should also attempt to address issues in the long
  term a market court a comprehensive regulator?