Speech by MOS Koh Poh Koon at the Second Reading of the Consumer Protection (Fair Trading) (Amendment) Bill 2016

Madam Speaker, I beg to move, “That the Bill be now read a Second time.”

Background on Consumer protection in Singapore

2.         The Government’s approach to consumer protection is based on promoting fair trading by businesses, and helping consumers to make informed purchasing decisions.  This two-pronged approach has benefited consumers and businesses who seek to serve their customers well, and helped resolve disagreements between businesses and consumers amicably. It is important for consumers to know their rights and be alert to unfair trading practices so that they can be in a good position to make sound purchasing decisions.  To this end, MTI works closely with the Consumers Association of Singapore (CASE) which plays a key role in championing consumer education and raising consumer awareness. CASE also helps consumers to resolve disputes with businesses through negotiation and mediation.  The majority of consumer disputes with businesses are resolved in this way.  Consumers are also able to file claims against businesses with the Small Claims Tribunal (SCT), which hears cases of up to $10,000, or $20,000 if both the consumer and business agree.

3.         The Consumer Protection (Fair Trading) Act, or CPFTA, is a key pillar in our consumer protection framework.  The Act provides for civil actions to stop errant businesses which engage in unfair trading practices.  The CPFTA empowers CASE and the Singapore Tourism Board (STB) to enter into voluntary compliance agreements (VCA) with errant businesses to stop them from engaging in unfair practices, and to compensate affected consumers.  

4.         Where errant businesses do not comply with the VCAs and persist in unfair practices, the CPFTA also empowers CASE and STB to apply for injunction action with the Courts to be brought against these businesses.  Injunctions which are ordered by the Courts require errant businesses to cease the unfair practices.  For egregious cases that involve criminal activities, they are handled by the Police who will investigate, and will prosecute the errant businesses under the Penal Code and the Miscellaneous offences (Public Order and Nuisance) Act.   

5.         Madam Speaker, as I have just outlined, our consumer protection framework comprises a spectrum of measures. Consumer education is a key pillar undergirding the whole framework.  When consumers encounter a problem, our consumer protection framework provides for an escalating set of measures, ranging from negotiation and mediation facilitated by CASE to assist consumers in resolving disputes, voluntary compliance agreements by retailers to stop unfair practices and compensate consumers, civil action through injunctions issued by the courts for errant retailers, and Police investigation and prosecution of egregious cases which involve criminal activities.  Consumer education is a key and fundamental component as it is important that every consumer makes his or her purchases with a clear evaluation of the many choices he or she is exposed to and understand the terms and obligations of the contracts he or she is entering into.  As the old adage goes, “Knowledge is power”.  Consumers who are aware of their rights are better able to make sound purchasing decisions. 

Gaps in Current Consumer Laws

6.         The majority of businesses engage in fair trading and seek to serve their customers well, maintain a good business reputation and aim to advance their business interests through positive sharing via “word of mouth” and social media in this internet era.  However, a small number of errant businesses have unfortunately continued to engage in unfair practices and take advantage of consumers, both locals and tourists.  This affects consumer confidence and dents our reputation as a shopping destination.  We saw this happen during the Mobile Air incident at the end of 2014. 

7.         MTI carried out a review of the CPFTA in 2015 to study how our consumer protection framework can be strengthened. We are conscious of the need to take a balanced approach, as overly onerous measures can impose unnecessary business costs which would ultimately be passed on to consumers.  

8.         The review found that there is a gap in the current injunction process.  It is slow as CASE and STB have no investigation and enforcement powers, and hence face operational difficulties gathering evidence to submit their applications to the Courts.  Some errant businesses have also side-stepped injunction orders by closing their businesses and setting up new ones.

9.         As part of our review, we studied the best practices and experiences of other jurisdictions such as Hong Kong and Australia.  We also engaged stakeholders including CASE, the Singapore Retailers Association, individual retailers, and Sim Lim Square Management Committee.  They are supportive of the proposed amendments, and provided views which we considered. 

10.      We also carried out a public consultation exercise over 4 weeks this year[1].  The respondents to the public consultation expressed support for the proposed amendments including strengthening the injunction process, and some of their feedback have been incorporated in the finalisation of this Bill.

Key Amendments

11.      Madam Speaker, the Bill before us is the outcome of our review.  Let me now outline the main amendments.

Appoint an administering agency for the CPFTA with investigation and enforcement powers

12.      SPRING Singapore (SPRING), a statutory board under MTI, is to be appointed as the administering agency for the CPFTA with investigation and enforcement powers.  SPRING is the best positioned government agency to administer the CPFTA as its mandate is to oversee the growth of enterprises in Singapore, including aspects of consumer protection such as standards and product safety.    

13.      Currently, the CPFTA does not provide CASE and STB with investigation and enforcement powers.  Hence, they face challenges in gathering evidence to file injunction applications with the Courts.  Clause 8 inserts new part 3A on investigation powers to be conferred on SPRING to obtain information, enter premises which it reasonably believes are being used for unfair practices, and take evidence.  Under new part 3B of the same clause, any person who obstructs SPRING’s investigations such as by destroying documents and providing SPRING with false information will be committing an offence.

14.      Clause 4 which amends section 9 on declaration or injunction, and clause 5 which repeals and re-enacts new section 10, empower SPRING as the only entity under the CPFTA to submit injunction applications against errant businesses to the Courts.  CASE and STB’s previous roles as specified bodies under the CPFTA which can submit injunction applications will be repealed to avoid duplication of effort.  CASE and STB will remain the first points of contact for locals and tourists, and will focus on assisting consumers with their disputes; including obtaining redress or compensation through negotiation, mediation and voluntary compliance agreements.  CASE and STB will surface cases of errant retailers to SPRING for investigation.

15.      With the appointment of SPRING as the administering agency, two consequential changes have become necessary.

Amendment to the Standards, Productivity and Innovation Board Act

16.      First, clause 14 amends the Standards, Productivity and Innovation Board Act to expand SPRING’s functions and powers for the administration and enforcement of the CPFTA.   

Abolishment of the Injunction Proposals Review Panel (IPRP)

17.      Second, clauses 5 and 11 abolish the Injunction Proposals Review Panel (IPRP).  The IPRP’s role was to ensure that CASE and STB only file injunction applications for serious cases since they did not have investigation powers.  As SPRING is empowered to gather evidence to file injunction applications, it is no longer necessary to retain the IPRP. 

18.      Madam Speaker, let me now move on to the other main amendment.

Additional measures may be imposed by the Courts on errant businesses as part of injunction orders

19.      The Courts may make injunction orders which restrain errant businesses from engaging in unfair practices.  Clauses 4 and 5 provide for the additional measures or accompanying orders that a court may make in addition to an injunction order.  Accompanying orders serve to raise consumer awareness of errant businesses, both entities and individuals, who are under injunction orders.  They also make it harder for errant businesses to side-step injunction orders by closing the business and setting up new ones under another person’s name.  Taken together, the additional measures that the Courts may impose will enable SPRING to monitor these errant businesses, and take swift enforcement action if the orders are not complied with.  

For entities

20.      Clause 4 allows the Courts to require businesses to comply with additional measures.  

a.    First, the Courts may require entities to publish notices of the injunction orders at their own cost in the form, manner, and frequency over a specified period.  These can include notices to be put up at the shop fronts or on websites. 

b.    Second, the Courts may require entities to notify consumers in writing of the injunction orders, and obtain their written acknowledgements of that notice, prior to entering into a transaction.  Entities that breach such accompanying Court orders will be required to refund consumers who cancel their contracts within 6 months of the transaction.  

c.    Third, all invoices issued by the entities may be required to incorporate the notice of the injunction. 

d.    Fourth, entities may be required to inform SPRING within 14 days of any changes to the business such as number of premises, and addresses at which the entities operate.  This will enable SPRING to monitor them as part of its enforcement efforts and take timely action if they do not comply with the court orders. 

e.    Fifth, entities may be required to reimburse SPRING for costs incurred to publish notices on CASE’s website to raise consumer awareness of the commencement of injunction action or injunction order.

For individuals

21.      Clauses 4 and 5 provide for SPRING to take injunction action against individuals such as partners, and those who knowingly instigate and help errant businesses to engage in unfair practices.  This serves to dissuade individuals from helping errant businesses to side-step injunction orders by setting up new businesses and persisting with the unfair practices. 

22.      The Courts may also require individuals who are under injunction orders to comply with additional measures. 

a.    First, the individuals may be required to publish notices of the injunction at their own cost. 

b.    Second, the individuals may be required to reimburse SPRING for costs incurred to publish notices on CASE’s website to raise consumer awareness of the commencement of injunction action or injunction order. 

c.    Third, they may be required to inform SPRING within 14 days of any changes to their employment which involves consumer transactions.  We also took in CASE’s suggestion to include changes to shareholdership of businesses that engage in consumer transactions as a notifiable event.  These measures will enable SPRING to monitor these individuals as part of its enforcement efforts, and take timely action if they do not comply with court orders.

23.      The additional measures that the Courts may impose such as publicising of the injunction orders, are for compliance over a specified period which is decided by the Courts.  This period is currently capped at 5 years, but may be extended by the Courts to 10 years if the errant business or individual fails to comply in the first instance.  Failure to comply with a court order is a contempt of court.  This is a criminal offence which could result in a fine and/or imprisonment.

24.      Taken together, the requirements for errant retailers to publicise the injunction orders and notify consumers of the injunction prior to entering into a transaction, as well as SPRING working with CASE to publish injunction orders serve to raise consumers’ awareness of retailers who are under injunction.  Consumers can then decide if they still want to purchase from the retailer.  This goes back to the principle of “caveat emptor”, with consumers exercising their choice and making informed purchasing decisions.  

Update of Second Schedule of the CPFTA

25.      In addition to the two main amendments, Clause 10 amends the Second Schedule of the CPFTA to clarify the definitions of the unfair practices to support SPRING’s investigation and enforcement, and make clear to businesses and consumers on what constitutes unfair practices. 

26.      The amendments are referenced from consumer protection legislation in other jurisdictions, and take in CASE’s feedback such as making clear that it is an unfair practice to refuse to give a consumer a copy of a written agreement if it was previously not given to the consumer. 

Conclusion

27.      Madam Speaker, our approach to consumer protection is a balanced one.  In drafting the Bill, we have taken great care to ensure that it is both pro-consumer and business-friendly.  The legislation is just one part of our consumer protection regime.  Consumer education is the other key plank.  MTI is working to operationalise the proposed amendments by the end of this year. 

28.      The proposed changes to the CPFTA addresses the issue of errant retailers, strengthens the spectrum of measures that may be taken against such businesses who persist in unfair practices, prevents errant businesses from side-stepping injunction orders, and raises consumers’ awareness of unfair practices and errant businesses so that they can make informed purchasing decisions. 

29.      Madam Speaker, I beg to move.