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Electricity retailers’ self-regulation bid rejected

Tuesday, 12 April 2011 | By Michelle Hammond
Electricity retailers have expressed dismay over their failed attempt to introduce self-regulatory mechanisms into the industry, claiming that start-ups will suffer as a result.

 

Last month, the electricity industry put a proposal to the Australian Competition and Consumer Commission to set up an independent body to accredit doorknockers, field complaints and administer a code of conduct.

 

The move, seen as an attempt to safeguard the future of the practice, came after Victoria’s Energy and Water Ombudsman Fiona McLeod revealed that complaints about marketing-related issues rose 33% in the previous financial year, describing the issue as a “mounting concern for consumers”.

 

McLeod said the proposed code was an opportunity to improve confidence in the conduct of retailers, giving her support to the proposal.

 

Yesterday, the ACCC issued a draft decision knocking back the proposed code of practice, saying it was “unlikely to produce material benefit for consumers”.

 

ACCC chairman Graeme Samuel said in a statement that while the regulator supports efforts by the energy industry to improve outcomes for customers through the adoption of self-regulatory mechanisms, it believes the proposed code is “unlikely to deliver on this objective”.

 

The ACCC found the code had a number of flaws, indicating that it fell short of existing legislative requirements and that the sanctions were not a sufficiently strong deterrent.

 

The industry has expressed dismay over the decision, arguing the code was put forward in response to various demands for greater self-regulation from governments.

 

Cameron O’Reilly, executive director of the Energy Retailers Association of Australia, says his members are concerned about the repercussions of the decision.

 

“The decision indicates a lack of appreciation of the role door-to-door [selling] plays in the market, especially in helping small new entrant retailers win market share,” he says.

 

Nicole Rich, director of policy and campaigns at the Consumer Action Law Centre, says the ACCC’s decision is “sensible”.

 

Rich says there is still a high level of dissatisfaction with the door-to-door sales techniques used by retailers, but believes better enforcement – rather than more regulation – is the solution.

 

Tim Wolfenden, chief executive of comparison and switching service Make It Cheaper, supported the call for a code of conduct, believing there should also be a registrar of “predatory” door-to-door salespeople.

 

“This would create visibility and allows the industry to avoid salespeople who have committed malpractice,” he says.

 

Wolfenden says nine times out of 10, the door-to-door sales technique is less than ideal because it consists of one person selling one retailer, which is selling one proposition.

 

“A lot of salespeople work on commission, so it’s just a numbers game; it’s imperative to make a certain number of sales come hell or high water,” he says.