Individual members of ADMA will address other aspects of the Consultation Paper.

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1 20 March 2009 SCOCA Australian Consumer Law Consultation Competition and Consumer Policy Division Treasury Langton Crescent PARKES, ACT 2600 Via Dear SCOCA, The Australian Direct Marketing Association (ADMA) welcomes the Consultation Paper - An Australian Consumer Law - released by the Hon Chris Bowen MP on 17 February ADMA will primarily address the section in Chapter 11: Suggested reforms designed to achieve national consistency - Door-to-door trading and telemarketing. Individual members of ADMA will address other aspects of the Consultation Paper. ADMA's responses to the key questions asked are as follows: Telemarketing Do businesses operating in multiple jurisdictions incur additional compliance costs as a result of different telemarketing regulation? Yes, particularly as the user-pays costs of mandatory compliance with the national Do Not Call Register are additional. Should the Australian Consumer Law include a provision regulation telemarketing? No. What other approaches might be used? All provisions relating to telemarketing in State and Territory fair trading, door-todoor and other legislation should be repealed. 1

2 Best practice standards for outbound telemarketing with existing customers being specifically excluded be incorporated into the Do Not Call Register Standards where that is not already the case eg. cooling off periods. State and Territory governments to provide undertakings subject to sanctions for non-performance as part of the COAG Reform Process to recognise the DNCR Standards and to commit not to regulate unilaterally in future. DNCR Standards to be referenced in the Australian Consumer Law. Door-to-Door trading Do businesses operating in multiple jurisdictions incur additional compliance costs as a result of different door-to-door sales regulation? Yes. If so, provide evidence of this. ADMA does not represent the majority of organisations involved in direct selling, as opposed to direct marketing which is predominantly data-driven. Should the Australian Consumer Law include a provision regulating door-to-door sales? Yes. If so, how should this be achieved? Door-to-door regulation should be de-coupled from telemarketing regulation. A Reference Group (see below) should advise SCOCA and COAG on the most appropriate provision to be included in the Australian Consumer Law. Implementation Process ADMA recommends that a Reference Group be established to advise COAG, MCCA and SCOCA and to recommend the best way to achieve reform and national consistency in telemarketing and door-to-door trading regulation. In addition to government and consumer representatives it would be necessary to ensure the following are represented: ADMA, Direct Selling Association, Australian Mobile Telecommunications Association, Australian Teleservices Association, Australian Communications and Media Authority, Department of Broadband, Communications and the Digital Economy and the Telecommunications Industry Ombudsman. 2

3 Australian Direct Marketing Association ADMA is the peak association of the Australian direct marketing industry and represents over 500 member organisations including major financial institutions, telecommunication companies, energy providers, travel service companies, major charities, statutory corporations and specialist suppliers of direct marketing services. According to recent Commercial Economic Advisory Services of Australia (CEASA) research 715, 385 Australians were employed in the direct marketing industry in 2006 and it had revenues of $12.8 billion per annum. However direct marketing is more important to Australian businesses and the national economy than the statistics alone indicate. Almost every Australian company and not-for-profit organisation direct markets to its current and potential customers as a normal and legitimate part of its business activities. ADMA and its members are strong advocates of responsible consumer data collection, use, storage and security. Telephone marketing There is a basic misunderstanding about the nature of telephone marketing implicit and explicit in the Consultation Paper. For instance, on page 67 the following statement is made, "As door-to-door and telemarketing sales are largely unsolicited..." In relation to telemarketing this was the case when the issue was first considered by SCOCA and MCCA a decade and half ago. However since then telephone marketing along with all other forms of direct marketing have changed significantly. In 2008 Australia had an estimated 3,821 in-house or outsourced contact centres operating 191,000 seats on behalf of 1,806 organisations. (2008 Benchmarking Contact Centre Industry Report. callcentres.net. Sydney). Less than 15 per cent of the work of these centres is outbound telemarketing, or unsolicited 'cold calling' in the parlance of the Consultation Paper. The overwhelming majority of telephone marketing communication is to existing customers either businessto-business (B2B) or business-to-consumer (B2C). Direct marketing is now conducted via a variety of channels of communication the telephone is one. Generally, the process of regulation has been satisfactory either responding to market failure or clear consumer demand as was the case with the introduction of national Privacy legislation and the Spam Act. The exception has been telephone marketing. Hence, notwithstanding the comments above, ADMA commends Minister Bowen and all those involved in the COAG/MCCA/SCOCA process which has led to the Consultation Paper now under review. 3

4 The cost of telemarketing regulation is impossible to separate out from other compliance costs. In the case of telemarketing, the main issue is not compliance cost but the most appropriate form of regulation. As there is already a national regulatory framework in place in the form of the National Do Not Call Register Act and Standards, it is ADMA's view that it is more appropriate to repeal the different State and Territory regulation and incorporate the provisions into the pre-existing national scheme which is administered by the specialist telecommunications regulator, ACMA. ADMA advances the following reasons for this approach: 1. The reasons ADMA supported the previous Federal Government's DNCR was the belief that the DNCR Standards would extinguish the duplicated State and Territory provisions. Our faith in the then Minister for Communications proved to be misplaced. Although the Federal Government did not proceed at that time, ADMA was advised that there was no constitutional or legal reason not to do so. 2. Previous efforts at even minimal harmonisation between State government telemarketing regulations have failed. The Victorian Government makes frequent claims about its leadership in protecting consumers. This has not been the case in harmonisation. A much-vaunted attempt to harmonise NSW and Victorian law relating to telemarketing failed to produce an outcome. The DNCR Standards already cover calling times and have already established a defacto national standard as a result. ADMA believes that if the other main issues particularly cooling off periods were also included in the DNCR Standards as part of the Implementation process outlined below, harmonisation would be most effectively achieved. In proposing an alternative solution ADMA in no way wishes to detract from the proposed Australian Consumer Law process. It is possible, for instance, for the DNCR Standards to be referenced in the Australian Consumer Law ensuring that the latter provided full coverage of consumer protection provisions. Door-to-Door Trading ADMA has less coverage and expertise in door-to-door sales than telemarketing. Direct marketing techniques by definition are data-driven, unlike the traditional door-to-door techniques which for the most part,contact households indiscriminately. Door-to-door traders are more likely to belong to the Direct Selling Association than ADMA. There is some degree of cross-over particularly by relatively new companies and utilities which have come into existence as a result of national competition policy reforms. These include electricity and gas retailers, telecommunications carriers and subscription broadcasters. These organisations use data-driven techniques to direct their marketing programs including in some cases door-to-door sales. 4

5 As many of these organisations operate on a national basis or in more than one jurisdiction, it will obviously be beneficial and more efficient for regulation to be harmonised. However the conditions which pertain to regulating door-to-door trading are different from telephone marketing which is one reason why ADMA recommends decoupling the two sets of regulation. The other reason is that while ACMA already operates the DNCR it has neither the expertise nor the mandate to regulate door-to-door trading. That the two sets of regulation have become hopelessly entwined is evidenced in Tables 11.1 and ADMA recommends that door-to-door trading regulation be incorporated into the Australian Consumer Law under the guidance of the Implementation Process outlined below. Implementation Process The ADMA Code of Conduct is based on the Model Direct Marketing Code originally drawn up by a Government/Industry/Consumer Taskforce and approved by MCCA in That Code included telemarketing provisions which were also drawn up by a consultative committee run by the then-telecommunications regulator AUSTEL. As separating the telemarketing and door-to-door regulation will involve the telecommunications bureaucracy (ACMA and DBCDE) and both techniques have changed considerably since MCCA/SCOCA last considered them, the process will best be served by having the advice of a Reference Group as was the case in the 1990s. ADMA suggests that the independent Chair of the ADMA Code Authority, John Wood, would make an ideal Chair of the Reference Group. As Chair of the ADMA Code Authority he is familiar with handling consumer telemarketing complaints. He was formerly Director of the Federal Bureau of Consumer Affairs, Deputy Commonwealth Ombudsman and a Council member of the Australian Consumers Association. As listed above it will be necessary to include representatives of the relevant government, industry and consumer organisations. We are happy to discuss this submission further at your earlier convenience. Yours sincerely, Rob Edwards Chief Executive Officer 5