IT IS NOT UNCOMMON in the commercial world, when customers are unexpectedly inconvenienced, for compensation to be offered so it’s time for the Australian Taxation Office (ATO) to recognise the damage caused by technology outages, according to the Institute of Public Accountants (IPA).

“We recognise the fact that the ATO has worked hard to fix system faults that have been a blight on its operations in recent years,” IPA chief executive officer, Andrew Conway said. 

“System downtimes such as that experienced last week comes at a huge expense for many of our members and quite simply, a mere apology doesn’t go far enough.

“The Scheme for Detriment caused by Defective Administration (CDDA) is currently under review by the government," he said.

“The existing framework provides little scope for intermediaries such as tax agents to make a claim.  It is not fit for purpose, especially in light of accountants facing rising costs from increased regulation and compliance requirements. 

“Practitioners who lose productivity time need to be compensated.  It is real time and it’s real income that is lost.  Time is an accountant’s commodity.

“Tax practitioners have faced loss of income, lost productivity, psychological injury from stress and anxiety and reputational damage from system outages and where the digital journey has not gone smoothly; all matters outside of their control," Mr Conway said.

“Public accountants have to work double time to make up for the time lost caused by the ATO’s system failures, robbing them of family time on weekends and causing them significant stress.

“While we understand that outages are a fact of life, unless the provider is adversely impacted and share the pain, there will not be a change in their approach," he said.

"Consideration should also be given to blanket redress arrangements in the event of a future digital disruption. 

"We recognise that it can be difficult to quantify the non-economic losses and the fact that not all intermediaries are equally affected.  This should not be a reason for not providing redress,” Mr Conway said.

www.publicaccountants.org.au

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has encouraged eligible small businesses impacted by financial misconduct as far back as January 1, 2008, to lodge a complaint with the Australian Financial Complaints Authority (AFCA).

From July 1, eligible small businesses will only have a one year window to apply to AFCA regarding complaints dating back to January 1, 2008.

“This is a positive step forward for small businesses who have fallen victim to financial misconduct, as AFCA previously only took complaints going back six years,” Ms Carnell said. 

“It’s a very simple process that involves clicking the yellow 'Make a complaint' button on the AFCA website.

“Small businesses could be awarded up to $1 million in compensation if their claim is successful, and the maximum compensation for primary producers is $2 million.”

A small business is eligible to apply if:

• it has less than 100 employees
• the complaint relates to loans under $5 million
• the submission is about a financial entity that was a member of AFCA at the time of the complaint
• the small business has not already had their case heard by the Financial Ombudsman or a court.

“It is unfortunate that AFCA is bound by the $5 million limit as we know of a range of cases where the small business loan was over this amount and those businesses have nowhere to go – no access to justice,” Ms Carnell said.

“These businesses don’t have the resources to take financial misconduct to court and they deserve justice too.”

AFCA will refer the complaint back to the financial firm to resolve and if the financial firm is unable to satisfactorily resolve a legacy complaint, AFCA will begin investigating from October 1, 2019.

Before small businesses submit their complaint they are encouraged to:

• identify the financial firm to which they have the complaint
• identify the main issues as part of the complaint
• identify the losses incurred and what outcome is sought
• collect any relevant documents that support the complaint. However it is not mandatory to have all of the documentation.

“This will go some way to providing access to justice and redress to many small businesses, but we will continue to put pressure on the government to adopt Ramsay’s supplementary report on a scheme for small businesses with complaints relating to loans over $5 million that includes options such as an independent forum to hear past disputes or government supported legal funding,” Ms Carnell said.

www.asbfeo.gov.au

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BUSINESSES who provide warranties in relation to either products or services have until the end of the week to bring those warranties into line with changes to the Australian Consumer Law (ACL).

According to intellectual property law specialist at Mullins, based in Brisbane, Andrew Nicholson, if warranties and not brought into line with the ACL requirements that take effect this Sunday, June 9, 2019, they could face substantial penalties and fines – potentially up to 10 percent of annual turnover. 

Mr Nicholson said promises provided by suppliers (or manufacturers) to consumers about what they will do if goods have a fault are commonly known as ‘warranties against defects’. Those warranties are voluntary and, if given, will apply in addition to any consumer guarantees under the ACL.

Warranties against defects must also comply with prescribed requirements and include standard text from June 9, 2019.

Mr Nicholson released a detailed explanation of how the system now works.

The warranties which are required to be given are divided into three categories and are different for each of:

• Defects for goods only
• Defects for services only
• Defects for goods and services

CONSEQUENCES OF NON-COMPLIANCE

Penalties of up to $50,000 can be imposed for failing to include the prescribed text. Additional penalties can also be imposed if the text used is misleading about consumers’ rights, entitlements under warranty or guarantee provisions up to $10,000,000, or 10 percent of the annual turnover of the supplier in the past 12 months.

Businesses should review any document which contains a warranty against defects (such as terms and conditions, packaging, website, etc.) to ensure that it includes the new prescribed text. Warranty documents provided by sellers and manufacturers should:

• Be transparent.
• Concisely state what the business must do (for example, repair or replace the goods); and what the consumer must do to entitle the consumer to claim the warranty, for example, cease using the goods when a fault arises or contact the supplier or manufacturer and point to the defect.
• Prominently state the following information about the person who gives the warranty: the person’s name, the person’s business address, the person’s telephone number, and the person’s email address (if any).
• State the period or periods within which a defect in the goods or services to which the warranty relates must appear if the consumer is to be entitled to claim the warranty.
• Set out the procedure for the consumer to claim the warranty including the address to which a claim may be sent.
• State who will bear the expense of claiming the warranty and if the expense is to be borne by the person who gives the warranty—how the consumer can claim expenses incurred in making the claim.
• State the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under a law in relation to the goods or services to which the warranty relates.

ADDITIONAL OBLIGATIONS UNDER CONSUMER GUARANTEES

Any warranties should also be consistent with consumer guarantees, which automatically apply to goods and services purchased by consumers under the ACL. Manufacturers and importers must also comply with certain consumer guarantees and they cannot be excluded by agreement or under any terms of sale.

The guarantees include that those goods must:

• be of acceptable quality.
• be fit for purpose.
• satisfy any express warranty (such as warranties against defects).
• have spare parts and repair facilities available for a reasonable period of time, unless otherwise advised.

WHERE GUARANTEES ARE NOT MET

Consumers are entitled to a remedy, which could be either a repair, replacement or refund and compensation for any consequential loss, depending on the circumstances. For minor problems, the seller can choose whether to take a replacement, repair or refund the goods. For major problems the consumer can choose to reject the goods and obtain a full refund or replacement, or keep the goods and seek compensation for the reduction in value.

APPROACHING THE MANUFACTURER DIRECTLY

Consumers are entitled to approach manufacturers directly for a remedy and may take action against manufacturers to recover costs, which include an amount for reduction in the product’s value and in some cases compensation for damages or loss.

If the problem is the manufacturer’s fault, the consumer is still entitled to ask the seller to provide a remedy, and the seller must oblige. The manufacturer must then reimburse the seller, including for any compensation paid to the consumer for reasonably foreseeable consequential losses.

Consumer guarantees won’t apply where a consumer simply changes their mind. However, as suppliers must comply with consumer guarantees, signs which provide blanket statements such as ‘No refunds’ are unlawful because there may be instances where the consumer is still entitled to a remedy.

MISLEADING STATEMENTS

“Finally, it is important not to mislead consumers about their rights,” Mr Nicholson said.

“Within the last week, Jetstar was ordered to pay almost $2 million dollars in penalties for misleading passengers about their right to refunds on cheap fares, by indicating that only more expensive fares were refundable,” he said.

“That is misleading as, under the ACL, customers whose flights were cancelled or significantly delayed due to reasons within Jetstar’s control are entitled to refunds.

“Sellers must not tell customers they should approach the manufacturer or importer of the goods for assistance. Customers are entitled to deal with the seller, and sellers must deal with the problem when approached.

“Sellers also must not suggest that their consumer guarantees are limited to any warranty period. The consumer guarantees apply regardless of any warranties which have been given and may apply for a longer period than an express warranty, depending on the quality of the goods, sale price and consumer expectations.”

www.mullinslawyers.com.au

Andrew Nicholson is a partner with law firm Mullins based in Brisbane. He is a specialist in intellectual property and commercial law. Mullins is an Industry Expert member of Queensland Leaders, helping to foster the upcoming generation of leading companies in Queensland.

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