Developing a Fair Trading compliance programme

The Fair Trading Act exists to prohibit certain conduct and practices in trade and to provide for the disclosure of consumer information relating to the supply of goods and services and to promote product safety.

A strategic goal for the Commission is for consumers to be confident about the accuracy of information they receive when making purchasing choices. The Act also encourages businesses to comply and in this way promotes the Commission's aim of achieving effective competition.

Honest businesses are disadvantaged when consumers are misled into buying a competitor's products or services due to false or misleading advertising practices.

Penalties for non-compliance with the Act can be onerous and the resulting damage to a company or individual's reputation can be severe.

A compliance programme is an in-house checking system designed to ensure that businesses and their staff do not breach the Fair Trading Act.

The Fair Trading Act applies to both accidental and deliberate conduct, so a compliance programme can pick up mistakes and oversights which could otherwise land a business in trouble. Remember, also, that a business is responsible for the actions of its staff and agents.

Businesses are obliged under the Act to ensure that the information they provide is accurate and that important information about the goods or services they provide is not withheld. This enables consumers to make informed choices about goods and services.

The existence of an effective compliance programme may in some circumstances also assist a business in establishing a legal defence to any prosecution under the Act. The court may also view favourably the existence of a compliance programme when imposing penalties for breaches of the Act which occurred despite the diligent supervision of the business.

There are other good reasons for a business to have a compliance programme including improved customer service from better informed staff and better customer relations as the company will be identified by customers as a good business.

Dealing with complaints appropriately can also provide valuable information that will help management identify problems and deal with them before they become big issues.

In order to support businesses to comply with the Fair Trading Act, the Commission has developed a set of Fair Trading Act compliance resources intended to guide businesses as they develop, implement, maintain and improve an effective Fair Trading Act compliance programme.

The resources we provide are:

Disclaimer

These compliance resources are guides only and reflect the Commerce Commission's view. Use of these compliance resources does not in itself guarantee compliance with the Act. However, an effective compliance programme, properly implemented, should mitigate the risk of contravening the Act.

Only the courts can make an authoritative ruling on breaches of the Fair Trading Act. These compliance resources are not intended to be definitive and should not be used instead of legal advice.

Maintaining systems

The sample Fair Trading Act compliance policy can be used as a basic in-house standard of conduct for Fair Trading Act compliance.

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Educating staff

An essential part of a compliance programme is the training of staff to ensure that, when dealing with the public, they always bear in mind their responsibilities under the Fair Trading Act.

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Promotional material and advertising

Many of the complaints made to the Commission are the result of inadequately checked publicity material.

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Handling complaints

A system to deal with complaints or possible contraventions of the Fair Trading Act should be part of any compliance programme.

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Understand your compliance obligations

The Fair Trading Act's primary focus is on anyone in trade – from a bank, hotel or department store through to the local plumber or corner dairy.

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