The Commerce Commission (ComCom) recently released its remediation guidance (Guidance) to assist businesses that:
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have identified conduct or omissions that may have led to a likely breach of one of the laws that the ComCom enforces (such as the Fair Trading Act 1986 and the Credit Contracts and Consumer Finance Act 2003); and
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intend to take steps to address the issue and, where appropriate, offer remediation (whether compensation or non-monetary measures) to affected consumers.
You can read the full guidance here.
The Guidance intends to provide “high-level generalised guidance to assist businesses in understanding the ComCom’s view as to how to conduct a structured and consumer-focused remediation process”.
The ComCom’s view is that the aim of remediation is to “put right” any harm that has been caused. Putting right may involve putting consumers back in a position they would have been in but for the likely breach. Alternatively, if putting right is not possible or appropriate, to make alternative arrangements for addressing harm (for example, payment of some other damages or another remedy (statutory or otherwise)), depending on the circumstances.
The ComCom also notes that there may be situations where a business may choose to remediate consumers in the absence of harm. For example, where the likely breach could result in statutory damages for consumers.
The Guidance states that remediation does not have a “one-size fits all” approach. A businesses remediation process can be scaled up or down to suit the circumstances, while ensuring that the remediation is proportionate.
The ComCom noted that in developing the Guidance, the ComCom took inspiration from the Māori concept of ‘utu’. ‘Utu’ is the concept of maintaining balance and can be applied in both negative and positive contexts. The aim of ‘utu’ is to restore that balance and harmony if there has been a transgression.
To assist with businesses finding the correct approach, the ComCom has provided nine principles that should be adopted in any remediation.
The ComCom’s nine principles of remediation
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Business who decide to remediate should take a genuinely consumer-focused approach.
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Consumer remediation should be comprehensive, timely, fair and transparent.
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Businesses should determine and/or calculate appropriate compensation in a way that is fair, equitable, transparent, and takes into account consumers’ interests and needs.
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Businesses should communicate with consumers about the progress and outcome of review and remediation processes in a clear, concise, timely and effective manner.
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Businesses should make all reasonable efforts to engage with affected consumers.
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Businesses should communicate the outcome of the review to consumers in a way that is clear and transparent.
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Businesses should provide remediation in a way that is convenient, accessible, and takes into account the needs of consumers.
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Businesses should ensure that any consumer remediation processes have an appropriate governance structure. The processes should be adequately resourced and have an appropriate level of senior oversight and reporting.
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Businesses should keep adequate records of any consumer remediation processes.
The Guidance discusses these principles in more detail.
If your business is currently undertaking a remediation process and would like to discuss this, one of our experts would be more than happy to help.
This article was co-authored by Travis Mackie, a Solicitor in our Banking and Financial Services team.
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