Hon Heather Roy speech to the First Reading of the Motor Vehicle Sales Amendment Bill; Parliament; Wednesday, June 24 2009.

Mr Speaker, I move that the Motor Vehicle Sales Amendment Bill now be read for the first time. It is my intention that the Bill be referred to the Commerce Committee.

Section 163 of the Motor Vehicle Sales Act required the Ministry of Consumer Affairs to conduct a review of the Act after two years of its operation.

This Bill is the result of a proactive assessment of the Act - which looked at whether the operation of the legislation is meeting the intended policy goals - and makes a number of amendments in order to improve the legislation's workability and operation.

As an ACT Party Minister in the National-led Government, I am very supportive of such proactive assessments of the relevance and effectiveness of legislation. Legislation should achieve its stated intention without imposing unnecessary and unforeseen side-effects.

The Motor Vehicle Sales Act came into force in December 2003 and introduced a new registration regime for motor vehicle traders. This regime served to make traders more accountable, but also offered more flexibility to participate in the industry.

New information disclosure requirements for used motor vehicles were introduced, and the Motor Vehicle Disputes Tribunal established to offer consumers a forum to hear complaints against traders.

The policy underpinning the Motor Vehicle Sales Act has several core elements: a requirement for motor vehicle traders to be registered; requirements for information disclosure concerning used motor vehicles; and provision for consumer redress through the Motor Vehicle Disputes Tribunal.

The Ministry of Consumer Affair's review of the Act considered how these were operating. The review identified areas where the Act's operation would benefit from amendment and the review report was tabled in the House in March 2008. This was followed by further consultation on the review's recommendations, leading to the amendments set out in this Bill.

Motor Vehicle Trader Registration
The Bill makes amendments to the renewal of annual registration by motor vehicle traders. At present, an individual applying to become a director of a motor vehicle trading company must supply a statutory declaration with their initial application. They are then required to provide an annual statutory declaration as part of the registration renewal process.

This requirement is onerous, costly and serves no purpose if details have not changed. The Bill amends the renewal procedure to allow a company secretary to confirm to the registrar that the information held on the registry about the company is correct. In particular, companies with directors based overseas will benefit from reduced compliance costs as a result of a small legislative change. Acceptance or refusal of a renewal application by the Registrar will remain essentially the same.

People can, however be appointed as directors between annual registrations without any check on their suitability. Accordingly, it is proposed that the MVSA be amended to require that notification of a new director - or of the appointment of an individual involved in the company's management - be accompanied by a statutory declaration as to their suitability for registration. Again, this is a small legislative change, but one that brings added protections for consumers that unsuitable persons are not legally able to become motor vehicle traders.

Further, a loophole in current legislation means that un-registered traders - or those whose registration has lapsed at the time of their conviction or bankruptcy - cannot be automatically banned from trading as a motor vehicle dealer in the future. Such traders can currently continue to sell motor vehicles until the Registrar can take a case to court to ban them - a process that can take some months, incurring costs to the Government.

This Bill closes that loophole and proposes that such a person can be automatically banned without being registered under the Act if they meet specific criteria - such as convictions for crimes of dishonesty, or a second bankruptcy within 10 years.

Motor Vehicle Sales Information Disclosure
The current Motor Vehicle Sales Act requires private sellers to display the Consumer Information Notice (CIN) or window card - containing trader, cost, vehicle, registration, Warrant of Fitness, and import details - when selling through a car market. In all other circumstances, private sellers do not have to display a Consumer Information Notice.

These notices are prescribed by regulation under the Fair Trading Act 1986, must be completed and displayed by traders when selling used motor vehicles, and must list a consumer's rights when purchasing from a trader.

The current requirements for private sellers at car markets to display a CIN notice are confusing for private sellers, and for consumers - who are often under the impression they have more rights than they do.

The requirement also creates compliance costs for car market traders, who spend much time ensuring that private sellers complete the forms, and diverts much of the Commerce Commission's enforcement time.

Under this Bill, traders using car markets will still need to display the Notice and car market operators will now have a specific obligation to ensure this happens.

The Bill also removes the requirement to display a Consumer Information Notice for transactions between traders, or between traders and wreckers. This is an unnecessary compliance cost on such traders as it provides no value to either party.

Motor Vehicle Disputes Resolution
The Motor Vehicle Sales Amendment Bill provides for costs to be awarded against a trader who does not attend a Motor Vehicle Disputes Tribunal hearing without good cause. While the existing legislation already provides for the award of costs against a complainant for non-attendance, this does not extend to non-attendance by a trader.

As many hearings are held near the trader's premises, this creates a perverse incentive for traders to be absent from the hearing as they know that costs cannot be awarded against them, causing inconvenience and cost to consumers. This amendment should lead to consumers having more timely access to redress.

Changes are also made to improve transparency through amendments to the Tribunal's reporting clauses in the Act. This will allow all decisions of the Tribunal to be made public. Through publication of the tribunal's decisions, motor vehicle traders and consumers will both benefit by learning what they can expect under the law.

Consumer advocacy groups will also be better informed and better able to pass this knowledge on to their clients. The Ministry of Consumer Affairs and enforcement agencies will be better positioned to assess the effectiveness of the Tribunal and monitor for any systemic issues within the industry.

Lastly, I bring to the attention of the House that the Bill increases the financial limit operation of the Motor Vehicle Disputes Tribunal from $50,000 to $100,000. This change in the limit reflects consultation with the Tribunal, industry and consumer organisations. It also recognises that motor vehicles - both new and used - may cost in excess of $50,000.

This change future proofs the financial limit and provides protections to consumers who purchase high-end vehicles. Regardless of a consumer's financial means, they can still have difficulty gaining redress from a motor vehicle trader. The change in the limit allows the consumer to have their issue heard in an appropriate forum.

The changes I have outlined will strengthen the operation of the Motor Vehicle Sales Act. They are designed both to reduce unnecessary compliance costs to industry, and to improve consumer protections and allow consumers to have better access to dispute resolution through the Motor Vehicle Disputes Tribunal in relation to vehicle purchases.

ENDS