The Consumer Protection Act - Part 1
 What Does The Building Industry Need To Look Out For?
Introduction and Context
The Consumer Protection Act is a very broadly formulated piece of legislation with far reaching effects for suppliers in any industry. The Act needs to provide for consumer protection for all manner of goods and services in the marketplace, and some of these provisions are therefore potentially ill-fitting for various industries. The building industry, in particular, runs the risk of being subject to certain inappropriate measures and/or unintended consequences that arise out of the application of a “one shoe fits all” approach.
With this in mind, the Master Builders movement has decided it needs to take the initiative and ensure that the interests of its members are looked after, while at the same time ensuring that the fundamental objective of the Act, being the protection of consumers, is fulfilled in a fair and efficient manner.
The Act provides for industry codes and several of the Master Builders Associations are collaborating in the drafting of a shared Code of Conduct which will ultimately result in an industry code. This entails going through the Act and formulating specific provisions, to allow for the practical and fair application to provide it in the industry, whilst still fulfilling the spirit of the legislation.
Once the code has been formulated and there has been sufficient stakeholder consultation, the code may well end up becoming promulgated and it is then this code which will be applied to consumer complaints relating to building activity.
The approach is currently focused on the activity of actual contractors but it envisaged that suppliers of materials and services as well as the built environment professionals may well end up within the ambit of this code. A further development may be the establishment of an ombudsman which would set up an alternative dispute resolution mechanism to allow for the handling of consumer complaints. We will keep members advised of progress in this regard and input is invited and is always welcome.
Potentially Problematic Clauses
There are a number of clauses which could be particularly problematic in the case of the building industry and providers need to be aware of how they can protect themselves and avoid giving consumers cause to take them to task in terms of the Act.
1. Pre-authorisation of repair or maintenance services (s22)
If a service provider has transacted to supply a repair or maintenance service and has taken possession of the property for these purposes, the service provider may not charge the consumer for such repairs unless it has provided the consumer with a cost estimate which the consumer has subsequently authorised. The service provider may also not charge for the cost of providing an estimate (i.e. an inspection to evaluate the extent of the maintenance or repairs) unless the price of repairing the estimate has also been provided to the consumer who has approved it in advance.)
The right to disclosure and information (s22)
The service provider who produces a notice, document or visual representation that is required to be provided to a consumer, need to do so:
- As provided for by any specific law; or
- In plain language. This means that the ordinary consumer of the class of persons for whom the notice document or representation is intended with the average literary skills and minimum of experience could be expected to understand the contents significance and importance.
This becomes important if a provider needs to show the consumer any specific plans or specifications for the purposes of clarifying or concluding an agreement.
As an example plans or documents may have abbreviations, technical designations or be described with reference to external standards that are well understood by the built environment professionals and the contractors who deal with them all the time. If the client is required to know what is going on in this regard, they will not be expected to know these oblique references and it will be well worth the while for the contractor or the service provider to ensure that all such references are interpreted or explained in such a manner that the consumer understands.
Clear and accurate information – trade descriptions (s24)
Trade Descriptions (a description giving an indication as to the materials of which goods are made or how they are manufactured etc.) may not be used to mislead a consumer as to any matter relating to the goods or services referred to in the trade description.
Again in the building industry there are many names and labels in use (e.g.” loft style” or “Italian marble”) which may not in fact be an accurate description of the product. It important to ensure that all descriptions are accurate and not misleading.
Fair and honest dealing – false representation (s41)
A suppler may not market any goods or services by making false statements or even using exaggeration, innuendo or ambiguity as to material facts. A supplier may not even fail to correct an apparent misapprehension on the part of the consumer.
The building industry and its activities are obviously of a specialised nature and service providers will be negotiating with clients who have very little knowledge. Building industry service providers are cautioned to be vigilant in this regard and go out of their way to ensure that consumers do not make choices based on misrepresentations or even misapprehensions. It is relatively easy for consumers to make uninformed choices which could result in agreement to purchase a product that is over-spec’d or over-designed. If the consumer proves that such misleading statements were made or that misapprehensions were not corrected, they will have recourse in terms of the Act and the provider will end up being out of pocket and be guilty of an offense.
Brandon Abdinor | Executive Director
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