ACCC walks the walk on consumer guarantees – Holden gives major undertaking

The ACCC has acted swiftly after the recent release of its Australian Consumer Law (ACL) review, with the regulator pursuing GM Holden Ltd (Holden) regarding the manner in which it has dealt with the manufacturing faults of its vehicles.

The ACCC’s investigation revealed Holden’s failure to comply with its consumer guarantee obligations under the ACL, and has now resulted in the car retailer accepting a court enforceable undertaking.

The ACCC was most concerned with Holden’s representations to customers that:

  • it had discretion to decide whether the vehicle owners would be offered refunds, repairs or replacements for a cars with manufacturing faults;
  • any refunds, repairs or replacements or vehicles would only be offered out of goodwill;
  • refunds would not be provided if any vehicles had been serviced by third parties, or if the vehicles had been purchased second hand.

Holden was able to escape further punishment by giving an undertaking to the ACCC that went beyond its obligations under the ACL.

Importantly, Holden has undertaken to:

  • take steps to clarify its internal compliance training program so as to reassure consumers that multiple minor failures of a vehicle may constitute a major failure;
  • for new vehicles, Holden has also committed to offering consumers refunds or replacements without the need for them to demonstrate major failures, as long as the defects prevent the vehicles from being driveable within 60 days of the date of purchase;
  • appoint an external reviewer to consider complaints made since 1 January 2016, and provide remedies to consumers, where appropriate;
  • complete a review of its dealer policies and procedures, and make amendments if necessary to ensure compliance with the ACL; and
  • implement a system where consumers are able to obtain information about any issues with their vehicles by contacting Holden and providing their vehicle identification numbers.

The ACCC’s handling of this matter provides evidence of the tough approach being taking to ensure compliance with the consumer guarantees under the ACL. The key takeaways of the matter need not be confined to the car industry – all traders should re-consider the legal compliance of their treatment of claims received from customers in relation to defective goods and services. Furthermore, the ACCC’s investigation serves as a reminder that the consumer guarantees in the ACL operate separately from, and in addition to, any manufacturers’ warranties.

In regards to the car retail industry, the ACCC has just released a new report, which will provide car retailers with guidance on the ACCC’s expectations across the industry as a whole.  We will be publishing further information on the Report shortly.

If you have any further questions about what this new development could mean for your business, or if you have any general queries relating to your consumer law obligations, please contact Paul Kirton or Kelly Dickson.