Govt plans to clamp down on unfair commercial practices

Published: Tue 24 Sep 2019 08:09 PM
Govt plans to clamp down on unfair commercial practices well received
By Rebecca Howard
Sept. 24 (BusinessDesk) - Government plans to clamp down on unfair commercial practices that can cripple small businesses have been well received by those lobbying for change.
“We’re taking action to prohibit the most serious types of commercial misconduct, and to ensure there are better protections against unfair contract terms,” Commerce and Consumer Affairs Minister Kris Faafoi and Minister for Small Business Stuart Nash said in a joint statement.
The first change would prohibit conduct that is ‘unconscionable’ – serious misconduct that goes far beyond being commercially necessary or appropriate. The second would extend current protections against unfair contract terms in standard-form consumer contracts to apply to business contracts with a value below $250,000 as well.
Examples of misconduct include individuals being threatened, verbally abused and blacklisted after asking for payment, and contractors having the scope of their work increased unilaterally without consultation or compensation, Faafoi and Nash said.
“There are existing laws that already prohibit unfair commercial practices, but the changes we’re making go further,” Nash said.
Faafoi said the government expected to introduce changes through a Fair Trading Amendment Bill by early next year.
“It was exactly what I was hoping it would be. For a long time, I have said we really do need legislation and this is the beginnings of that,” said Tenby Powell, who chaired the government’s small business council.
Powell has long been lobbying the government to ensure that unfair commercial practices were addressed and said a key issue has been extended payment terms where small businesses were at the mercy of the pay schedule of larger firms.
“You know that cash flow is king for small businesses. The damage that’s been done is phenomenal,” said Powell.
According to Xero Small Business Insights - which provides a monthly snapshot of the small business sector - small businesses were getting paid 8.9 days late on average across the country in July.
New Zealand Food & Grocery Council chief executive Katherine Rich said the move was pro-business and would particularly benefit small food and grocery manufacturers.
“FGC submitted on the proposals in the government’s discussion document and, like other submitters, provided examples of unfair conduct and contracts our members had experienced, and the impacts, such as negative cash flow, stress, business interruption, reduced profitability, and a reduced ability to focus on growing their business,” she said.
Importantly, “these proposals don’t undermine businesses’ ability to compete, participate in robust negotiations, or enter into contracts,” she said.
Road Transport Forum chief executive Nick Leggett said the changes would have a “profound impact on small transport companies that in some parts of the country are subject to unfair contract terms in the form of unilateral deferred payments."
According to Leggett, that was an "insidious practice used by some large corporates seeking to extend payment times to their suppliers beyond what is normally considered acceptable.”
However, he was cautious about how effective the prohibition on unconscionable conduct would be for smaller businesses without the resources to pursue legal action.
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk

Next in Business, Science, and Tech

Government Exempts Some Home Improvements From Costly Consents
By: New Zealand Government
The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards
By: New Zealand Media and Entertainment
ASB Takes The Lead Again With New Low Home Loan Interest Rate
By: ASB Bank
The Problems With Testing And Case Statistics For Covid-19
By: Nathan Hoturoa Gray
Fletcher Building to lay off 1000 staff in New Zealand
Driving prompt payments to small businesses
By: New Zealand Government
On Why We Should Legally Protect The Right To Work From Home
By: Gordon Campbell
Spark Welcomes Spectrum Allocation And Prepares For 5G Rollout Over The Next 12 Months
By: Spark
Bar reopening night 'much, much quieter'
New Zealand’s population passes 5 million
By: Statistics New Zealand
Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist
Tax changes throw cash lifeline to SMEs
By: New Zealand Government
Some Indicators Pick Up As New Zealand Moves Out Of Lockdown
By: Statistics New Zealand
Astronomers Discover The Science Behind Star Bursts That Light Up The Sky
By: University of Canterbury
International passenger numbers at Auckland airport drop 95 percent
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media