This story was originally published on RetailBiz by Ruth Cooper.
An interesting article from the Sydney Morning Herald this week outlines the Consumer Action Law Centre’s view that Australia should establish a Retail Ombudsman to “freely, quickly and fairly” resolve disputes between “ordinary Australians” and retailers.
This information comes from the centre’s pre-budget submission to treasury, in which acting CEO Denise Boyd said an ombudsman would give “certainty and justice in their consumer interactions and build trust in our retail markets”.
A similar scheme currently exists in the UK, and the centre’s submission notes that polling shows 60 per cent of Australians would use a retail ombudsman if available.
There appears to be a need for an external dispute resolution scheme, with the Australian Competition and Consumer Commission (ACCC) reporting that more than 20,000 shoppers complained to the regulator about consumer guarantees in 2016.
“These shoppers may have thought that the ACCC could take action on their behalf,” said Boyd. “This is not the case.
“There is a significant gap in ordinary Australians’ ability to seek justice in these cases because it is likely to involve complex, lengthy and quite possibly expensive legal action in courts or tribunals.”
How would it work?
Boyd said the centre recommends the UK Retail Ombudsman (UKRO) be used as a model. The UKRO covers disputes relating to goods and/or services purchased in-store or online and retail members are not required to join by law
Instead, retailers ‘opt-in’ and pay for membership according to the size of their business. Single store bricks and mortar retailers join for free, but any retailer beyond that must pay an annual fee according to a sliding scale.
“By the time the ombudsman commenced operation in January 2015, 3,000 retailers [were] signed up [paying] between £100 and £2,600 per year to subscribe,” said Boyd.
“The high concentration of the Australian retail market, dominated by large national chain-stores and franchises, lends itself to gaining substantial national coverage quickly.”
Members can also pay an annual fee to be vetted by the ombudsman to gain enhanced accreditation as a ‘trusty worthy trader’. The service is free to consumers and the ombudsman’s decisions only bind member retailers, who are contractually obligated to comply.
In the UKRO system, only consumers who have genuinely attempted to resolve their complaint with the trader can seek assistance, after which the ombudsman runs a two stage process. The first attempts to resolve the complaint through negotiation and then by making a recommendation if negotiation fails. If the recommendation is rejected, the ombudsman may then make a decision which is binding on the trader.