1 INTRODUCTION

1.1 Purpose of the Ministry

1.1. The Ministry of Consumer Affairs’ purpose is to work with consumers and business to promote a fair and informed market place.

1.1.2 Our information, education and advice work (undertaken by the Operations section) aims to empower consumers so they can exercise choice and be effective in asserting their rights and responsibilities in the marketplace.

1.1.3 We place emphasis on providing relevant information that enables consumers to resolve their own problems - a ‘self-help’ approach with a minimum of third-party assistance.

1.1.4 Given our limited resources, information, education and advice programmes are specifically targeted at:

• issues involving the most detriment for consumers; and
• those who are most disadvantaged by means of income and education.

1.1.5 The groups we target are low income, Maori and Pacific Island people along with the traders who deal most with our targeted consumers. These groups incorporate consumers who are most disadvantaged in the marketplace because they are:

• less able to access information to make informed consumer choices;
• less able to enforce their legal rights in the market; and
• less able to sustain the loss as a result of an unsuccessful consumer transaction, such as purchasing poor quality goods or a bad credit deal.

1.2 Review of the Operations Section

1.2.2 Primarily, the review of Operations was necessary because we were not meeting our objectives - to empower consumers, particularly those most in need, so they can exercise choice and be effective in asserting their rights and responsibilities in the marketplace . This was due to:

• the increasing demand on the public telephone advice service (the Consumer Advice Service) following the introduction of the Consumer Guarantees Act 1993; and
• the realisation that this service was not meeting the informational needs of targeted consumers.

• identify the best possible way to achieve our objectives within current resources; and
• reallocate current resources so that the needs of low income, Maori and Pacific Island consumers are being met.

1.2.5 An assessment of this service shows that it fails to reach those consumers the Ministry is charged with helping i.e. low income, Maori and Pacific Island people. The overwhelming majority of users of the service are not consumers that the Ministry targets.

1.2.6 Research undertaken by the Ministry (and others such as the Law Commission), shows that our target groups prefer to receive information by way of oral, visual and face to face contact rather than in written material or talking to a person they do not know over the telephone.

1.2.7 The review was started in mid-1996 undertaking research and consultation with a variety of agencies including:

• key Maori groups;
• key Pacific Island groups;
• key community advisory agencies;
• other Government agencies;
• other consumer agencies; and
• business and trader/industry organisations.

1.3 Link with the Interim Report

1.3.2 All the options were considered and assessed against the goal of the review and the following selection criteria:

• achievable within existing budget;
• best fulfills our strategic objectives;
• provides the greatest targeting results;
• maintains a regional presence for the best contacts;
• develops constructive relationships; and
• avoids the duplication of services.

1.3.4 We sought comment from within the Ministry and externally from a variety of agencies on the report. Specifically to gain external comment, focus groups were held with target consumers and key community advisory and Government agencies to discuss and seek feedback on the report and in particular the preferred option. The report on the findings from the consumer focus groups is attached in Appendix two.

1.3.5 All comments received by 7 July 1997 were considered when preparing the ‘Final Report on the Provision of Consumer Information, Education and Advice.’ The list of submissions received is contained in Appendix four.

1.3.6 Fuller discussion on the options that were discounted is contained in Part 7 of the interim report and assessment of our current work is contained in Parts 2 and 5 of the interim report. A table comparing the various options considered in that report is attached in Appendix one to show the key issues considered.

1.3.7 Set out immediately below are specific comments on two of the discounted options that were mentioned at a consumer focus group or in a written submission.

0900 Call Centre

1.3.8 Comment was made by a community law centre in the Wellington focus group that the Ministry should have canvassed the 0900 Call Centre option more fully because it would appear that the option would provide the further resources required to fund information and education programmes for target consumers.

1.3.9 In response, the Ministry reiterates that this option was rejected for the following reasons:

• low income, Maori and Pacific Island consumers and organisations we consulted confirmed they would not use an 0900 service - this point was echoed by the CABx and BAS respondents to our questionnaire;
• traders/trader industry group representatives indicated that they would not use an 0900 service;
• there is no comparable Government service to benchmark the option against. Therefore, it is difficult to assess the number of calls such a service will attract from any sectors;
• the cost recovery figures (in the interim report) were based on current call numbers; if these numbers were not met, charges would either need to be increased or the Ministry would have to meet extra costs from its operational budget which would threaten the Ministry’s operational budget;
• a user pays system may raise consumer expectations that they would receive more assistance than we would be able to provide;
• making the public aware of the parameters of the service before they called and incurred the minimum 0900 charge would be a major communication project;
• there would be a duplication of the CABx information provision role;
• if we provided an 0900 advice service to all consumers we would duplicate services available from solicitors; and
• the Ministry would be subject to the same legal obligations as a private sector service provider.

1.3.10 The Consumers’ Institute suggested that consideration should be given to the total Operations section of the Ministry being put out to competitive tender. It was contended that while the Ministry may be the most appropriate "government-funded provider of consumer advice, information and education, that the Ministry’s service should be contestable with interested parties providing an outline of the services they would offer and what they would charge for them."

1.3.11 This specific option was not considered in the interim report. However, the option of contracting out the telephone advice service was considered and discounted primarily for the following reason:

• the Ministry is not funded to provide a universal legal advice service. This option would see us continuing to do so but by contracting an external agency to deliver the service. Again, we would be required to commit resources that would otherwise be shifted to meeting our stated objectives.

  And, secondly:

• the resources were not available to consider the issues of the legal obligations of both contracting parties in terms of agency and accountability which would need to be explored thoroughly;
• skills in the area of contract drafting, negotiating, costing and management would have had to be acquired by the Ministry;
• unless the cost of managing contracts was offset against the amount granted to the successful tenderer, management of service contracts could see the Ministry confined to an administrative function; and
• the telephone advice service would become a commercial enterprise with concomitant responsibilities.

• the Ministry possesses:
  • legal expertise in consumer and credit law which is unique in the market;
  • expertise in working effectively with Maori and Pacific Island communities and disseminating consumer information to those communities; and
  • a combination of legal and community development skills and experience which is not readily available in any other single agency;

• these factors add considerable strength to the quality of the Ministry’s policy advice; and
• the neutral stance a Government department has compared to the risk that a contracting agency may be associated with, for example a particular group of consumers.