CONSUMER PROTECTION (FAIR TRADING) (AMENDMENT) BILL

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CONSUMER PROTECTION (FAIR TRADING) (AMENDMENT) BILL: Order for Second Reading read.

5.14 pm

The Minister of State for Trade and Industry (Mr Lee Yi Shyan): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Consumer Protection (Fair Trading) Act, or CPFTA, is a major pillar of our consumer protection framework. It provides consumers with legal safeguards against unfair practices, and enables them to have recourse to civil remedies before the Courts. The Act also allows specified bodies to enter voluntary compliance agreements with, or apply for injunction orders against errant traders. Suppliers are required to provide a cooling-off period for direct sales and timeshare contracts.

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Since the implementation of CPFTA in March 2004, the number of cases arising from the Act has been increasing steadily. In 2007, consumers lodged nearly 750 CPFTA-related complaints with the Consumers Association of Singapore (CASE). CASE also entered into eight Voluntary Compliance Agreements (VCAs) and obtained three injunctions against businesses. This shows that the CPFTA has been effective.

In July 2006, MTI and CASE jointly established a taskforce to review the CPFTA to take into account the new trends and patterns of consumer disputes. The taskforce's recommendations, which were accepted by my Ministry, became the basis for wider public consultations with consumer and industry bodies from October last year. We thank the many who contributed generously their suggestions to the improvement of the Amendment Bill.

Key amendments

Sir, the Bill before us is the outcome of the work mentioned above. Let me now outline the main amendments.

Inclusion of financial products and services

Clause 8 of the Bill extends the application of the CPFTA to financial products and financial services which are currently excluded. With the removal of the exclusion, the CPFTA would be applied to the financial products and services regulated under certain legislation administered by the Monetary Authority of Singapore (MAS) and under the Commodity Trading Act with the commencement of this Bill. This will be followed by the financial products and services that are regulated under the Moneylenders Act and the Pawnbrokers Act in 2009 and 2010 respectively, when the Ministry of Law completes its review of these legislation.

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By extending the CPFTA to financial products and services, two consequential amendments have become necessary:

First, clause 4 requires the Court to consider whether a consumer had sought to resolve a dispute through a specified dispute resolution scheme where available. My Ministry intends to designate the existing Financial Industry Disputes Resolution Centre Limited, or FIDReC in short, as the relevant scheme for disputes relating to financial products and services supplied by FIDReC subscribers. In this way, consumers will be encouraged to resolve their disputes with financial institutions via FIDReC first before going to Courts.

Second, clause 7 clarifies how the prescribed claim limit should apply when a consumer commences multiple actions involving the same unfair practice. My Ministry intends to provide that in such cases involving financial institutions, the claim amount for each of the actions should be aggregated for the purpose of applying the prescribed claim limit.

Sir, I will now move on to the other main amendments.

Regulation of timeshare products

Sir, timeshare-related disputes have been an increasing source of complaints. These involve businesses that claim to help customers or consumers re-sell or dispose of their rights under timeshare contracts, a business model that has emerged in recent years. To address this, clause 2 inserts a definition of timeshare-related contract. My Ministry intends to extend the cooling-off period that currently covers timeshare contracts to these businesses as well.

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Prescribed claim limit

To reflect the increasing claim values of consumer transactions, clause 3 increases the prescribed claim limit from $20,000 to $30,000. With this increase, we believe 99% of CPFTA-related complaints CASE received would be covered.

Jurisdiction of Small Claims Tribunal

Sir, the Small Claims Tribunals have been an integral part of the dispute resolution mechanism under the consumer protection framework. The Tribunals are designed to handle small and straightforward consumer disputes, and are therefore able to provide consumers with speedy and inexpensive resolutions. We are glad that the Tribunals are able to expand their jurisdiction to cover new areas of consumer disputes.

Clause 4 of this will extend jurisdiction to cases related to, firstly, the cancellation of timeshare and timeshare-related contracts during the cooling-off period and, secondly, a deposit paid in motor vehicle sale contract.

Clause 9 further extends jurisdiction to claims relating to a dispute arising from a contract to buy or sell foreign currency notes made with a licensed money-changer.

Limitation periods

Specified bodies currently have to commence an action against errant traders within a year of the last material event on which it is based. Experience has shown that this is insufficient time for specified bodies to build their cases and explore alternatives to litigation such as Voluntary Compliance Agreements with traders.

Clause 5 therefore extends the limitation period from one to two years for the specified bodies.

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Clause 5 also extends the limitation period for consumers from one to two years. In addition, clause 3 allows the Court to stay the proceedings for consumer's action when there is another action by a specified body relating to the same unfair practice. These amendments allow consumers to better rely on the efforts of specified bodies.

Burden of proof

Sir, traders are often in a better position than consumers to keep proper records of their actions. Clause 6 gives the Minister the power to make regulations to place on suppliers the burden of proving that they have complied with certain requirements of the CPFTA or its regulations. My Ministry intends to apply this in two specific cases. First, timeshare industry and direct selling suppliers must prove that they have given the consumers information notice to inform consumers of their rights in relation to the cooling-off period. Second, motor vehicle dealers must prove that they have informed consumers in writing of their deposit refund policies, and applied for a loan in terms agreed by the consumer.

Regulations

To operationalise the proposed amendments, my Ministry is finalising the supporting regulations as well as implementing other recommendations made by the review taskforce. We will issue them shortly.

In conclusion, Sir, the principle of "caveat emptor" remains fundamental in our overall approach to the regulation of consumer transactions. To that end, the amendments to the Act aim to inform both businesses and consumers of the desired standards of fair dealing across a broader spectrum of products and services. In the long term, an increase in consumer sophistication remains the first-line and best defence of their interests.

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Continual consumer education is therefore critical in ensuring that consumers are informed to make smart choices.

The proposed amendments in this Bill also reflect a concerted effort by all the stakeholders to make the existing consumer protection framework even more robust. In drafting this Bill, we have taken great care to ensure that it is both pro-consumer and business-friendly. We believe that a sustainable consumer protection framework is also a win-win framework embraced by both consumers and businesses.

Sir, I beg to move.

Question proposed.

5.24pm

Mdm Ho Geok Choo: Mr Deputy Speaker, Sir, I rise in support of this Bill.

I would like to comment on clause 2 of this Bill which extends the protection for consumers under this Act to include certain financial products and services. This is timely because of the high pressure and sometimes misleading sales tactics used in the financial services and beauty industries. While we must remember the principle of "caveat emptor", at the same time we must try to protect the most vulnerable to unfair sales tactics. Currently, the financial services sector is to a certain extent regulated by the Financial Advisers' Act but there are still financial services which do not fall under the stringent regulation of the Financial Advisers' Act, such as moneylenders. For instance, consumers aggrieved by a particular moneylender would have no civil remedy against the moneylender. The changes to the CPFTA will strengthen the remedies that consumers have against errant merchants and send out a strong deterrent message to would-be crooks.

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Clause 3 of this Bill increases the cap on the amount that can be claimed via an action brought under this Act from $20,000 to $30,000. I see this as a welcome change. While this Act was initially introduced for the benefit of small-time consumers, there is no reason that we should not protect big-time consumers as well. If allowing a claim through the Small Claims Tribunal under this Act would save much of the Courts' time, why not extend this to larger spenders? Also, with inflation and increased consumers spending, it is good that the cap be raised so that the remedies under this Act can be made used of by more consumers.

Sir, clause 6 is an interesting clause because it places the onus of proving compliance with the statutory regulations on the supplier where there is a dispute. If I understand it correctly, the current position is that in a lawsuit, the party alleging the fact has to prove it. With the implementation of this clause, the consumer can allege unfair practices on the part of the merchant without having to prove it while the merchant will have to scramble to prove that he has in fact complied with the CPFTA. This seems to place an onerous burden on the supplier and may not be the best balance between protecting consumers' rights and not impeding businesses or business practices through over-regulation.

Suppliers may feel threatened by this clause and thus take more precautions in their business dealings which may lead to increased cost of compliance. Such cost could either reduce the competitiveness of a business or end up in higher cost for the consumers if the costs of compliance are passed on. But, Sir, there is one bright spot in this clause, which is that the Minister retains the discretion to specify the regulations to which this reversal of the burden of proof will apply. Ideally, it

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should only apply to those where the customers will find it difficult to prove lack of compliance while it is easier for the suppliers to prove compliance in order to ensure that this clause is fair to both sides of a consumer transaction.

In the light of the foregoing, Sir, I support this Bill.

5.28 pm

Mr Yeo Guat Kwang (Aljunied): Sir, the introduction of the CPFTA is a major step for consumerism in Singapore. The Act helped consumers to seek redress when vendors had engaged in unfair practices. For instance, last year, under this Act, CASE had managed to help consumers to recover S$4 million in kind and in cash. We strongly welcome the amendments to the CPFTA to widen its scope and appreciate that several suggestions from CASE have been taken into consideration in the current amendments to the CPFTA. These include increasing the prescribed claim limit from $20,000 to $30,000. We strongly believe that the Consumer Protection (Fair Trading) (Amendment) Bill will further benefit and provide better protection to consumers.

As the President of CASE, I am happy to note that the cooling-off period would also be extended to the resale timeshare industry. In year 2007 alone, 300 consumers had filed their disputes against resale timeshare operators with CASE. The extension of the cooling-off period to the resale timeshare industry would no doubt offer consumers some level of protection. However, it would also be better if MTI could consider the proposal that the suppliers or vendors are not allowed to collect huge sums of deposit during the cooling-off period, as such restriction would pre-empt the need to recover the money from the vendors subsequently. CASE is also disappointed that the cooling-off period is not extended to include contracts

entered in the beauty

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industry, which has also caused a lot of complaints for the consumers recently. I hope MTI could review these suggestions favourably too.

Sir, let me now speak in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] This Bill is very timely. Let me give Members a real life case. Earlier this year, a 56-year old lady just collected her CPF money and she went to a local bank to deposit the $30,000 into a fixed deposit account. Before he could proceed with the transaction, she was approached by a financial consultant who advised her to invest the money into a new financial plan which would yield a higher interest and return. However, this financial consultant did not highlight to her the financial risks involved. A few months later, she went to the bank to inquire about her bank balance and discovered that there was only $25,000 left in the account. She was very worried because she wanted to save the money for her son's university education. Therefore, I believe that the amendment to the Act to include the sale of financial products and services is a step in the right direction. It is appropriate and timely. After the amendment, the Act would protect people like this 56-year old lady. Meanwhile, CASE has acted upon this matter and negotiated with the bank on her behalf, but we have yet to receive a response from the bank.

*Cols. 3133-3134.

( In English) : We hope MTI could consider another new feedback we receive from consumers on unfair practices in the telecommunication sector which are the auto-renewal clauses in the contracts. This is prevalent in the telco contracts such as Internet access, subscription plans for handphones and television services. I am of the view that auto-renewal clauses are unfair to consumers. Consumers should be given the option to source for new providers

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upon the expiry of their contracts. Providers could and should remind their customers about a month before the expiry date of the contracts and encourage them to renew their contracts with them, instead of making it automatic.

CASE also noted instances where suppliers deter consumers from seeking third party assistance by stating in the contract that once a third party intervenes, the contract will become null and void. Consumers are also told that the contract is private and confidential and should not be disclosed to third party, including CASE. We find such practices unfair. Consumers should not be prevented from seeking third party assistance for any contract dispute. Consumers are usually in a less knowledgeable position than the suppliers and, hence, are greatly disadvantaged and vulnerable, and need more help.

We hope MTI would consider including such third party exclusion clause in the contract as unfair practices under the Second Schedule of the CPFTA.

In response to concerns raised by Mdm Ho Geok Choo about the business community, with the new amendments, Sir, I think the business associations should play a more important and active role in educating their members and working with them to ensure that their practices do not breach the law and have a better understanding of the scope of CPFTA. CASE hopes to see more self-regulation and prepare to work with all the business associations closely to achieve this. I would like to know whether the Ministry has any plan to make the implementation of this legislation more effective. What role would the relevant Government agencies like MAS, SPRING Singapore and the Singapore Tourism Board play? And would MTI coordinate better efforts by these agencies? What support would they provide to the retail

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and service sectors to educate the traders and facilitate the effective implementation of this CPFTA?

5.34 pm

Mr Lim Biow Chuan: Mr Deputy Speaker, Sir, please allow me to declare my interest when speaking on this topic as the Vice-President of the Consumers' Association of Singapore.

Early this year, during the Budget debate, I had asked MTI for an update on the progress regarding the revision to the Consumer Protection (Fair Trading) Act. As most people would know, the CPFTA is one of the principal legislation which promotes a fairer and more equitable marketplace and affords better protection for consumers in Singapore. It has been more than four years since the Act came into force. Over these four years, due to changing trade practices, certain aspects of the Act would need to be updated or fine-tuned to ensure that the legislation remains relevant. I am indeed grateful that the Government has tabled this Bill to amend the CPFTA in response to repeated requests from consumers all over Singapore.

Sir, I believe the amendment to the Act to include the sale of financial products and services is a step in the right direction. Over the past years, complaints regarding the sale of financial products remain high. Most of these complaints relate to the aggressive pushing of financial products to elderly or illiterate consumers who may not appreciate fully the nature of such products and the nature of the risks involved. Even educated persons may not appreciate the complicating financial products that are being sold. For example, I have seen some of the capital guaranteed product does not necessarily mean that your capital is guaranteed. It will be subject to

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various deductions for costs and expenses.

Sir, many of the consumers are only told of how much better returns can be attained with the investment in the financial products and the potential risks of losing your investment is glossed over. In such circumstances, the financiers should have recourse under the Consumer Protection (Fair trading) Act as the sale was made to them under undue pressure or undue influence. I also applaud the Government's move to extend the jurisdiction of the Small Claims Tribunal to hear and determine claims made under the Consumer Protection (Fair Trading) Act. For many, consumers, who have disputes with businesses, face financial limitations when trying to engage lawyers if their disputes with the businesses cannot be resolved amicably. Once their claim exceeds $20,000, they not only have to incur hefty legal costs to seek legal redress, they also have to worry that the businesses which have legal pockets would bully them by endless litigation. The increase in the prescribed limit from $20,000 to $30,000 would certainly allow more consumers to be able to seek redress through the Small Claims Tribunal without having to incur expensive legal costs.

Sir, the extension of the limitation period to commence the claim from the current one year to two years is also welcome, and this would allow consumers more time to seek advice or mediation with the businesses through the CASE mediation services.

Sir, there are just three areas in which I wish to seek clarifications from the Government. In the explanatory note to the Bill, it was stated that the Financial Industry Disputes Resolution Centre Limited, or FIDReC, would be prescribed as a specified dispute resolution scheme for disputes relating to certain financial products and services regulated by MAS.

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Could the Minister clarify whether MAS would be designated as a specified body under the Act to monitor the businesses which are in breach of the Consumer Protection (Fair Trading) Act and whether MAS has the power to seek voluntary compliance agreement or a mandatory injunction against recalcitrant financial companies who flout the Act?

Sir, I also previously asked that the onus and cost of prosecution of errant traders under section 9 of the Act be transferred to the Attorney-General's Chambers once CASE has made a successful application to the injunction proposal review panel. This is because CASE is a non-Government body and has limited funds to carry out such prosecution to obtain a mandatory injunction. Each time, CASE takes action to apply for such a mandatory injunction under the Act, the legal cost involved is very, very high. Would the Minister consider the request? I also understand from the consultation exercise held in September last year that the Ministry intended to introduce a Consumer Protection (Fair Training) Opt Out Practices Regulations. This is an area in which CASE has been advocating for a while. May I ask the Minister when would the regulations be implemented?

Finally, Sir, in view of the fact that trade practices evolve rapidly in an open economy like Singapore, may I urge the Government to implement regular reviews of the Consumer Protection (Fair Trading) Act to ensure that the law remains relevant and useful. For example, there used to be many complaints against the undue pressure used by some companies for the sale of timeshare holidays. In recent times, the tactics have changed. Now the companies are making false promises and undue pressure to persuade the consumers that in exchange for payment of a hefty fee, the company can assist to resell timeshare holidays which the consumers had bought previously. So

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the consumers, having paid once to buy timeshare holidays, now pay a second time to sell their timeshare holidays. Hence, the need for the laws to be reviewed regularly to cater to changing unfair tactics against consumers.

Sir, I support the Bill.

5.40 pm

Mr Siew Kum Hong: Mr Deputy Speaker, Sir, I rise in support of the Bill.

The Consumer Protection (Fair Trading) Act took effect on 1st March 2004. Consumers and businesses have had over four years to become familiar with the Act with what is permissible under the Act and what is not. The Consumers' Association of Singapore, or CASE, as a specified body under the Act, has played a key role in giving teeth to the Act. This update of the Act is therefore timely. While any enhancement to consumer protection is praiseworthy and to be welcomed, the Amendment Bill is nevertheless not perfect. I will touch on four areas.

Firstly, the Amendment Bill expands the jurisdiction of the Act to include financial products and services, motor vehicle sale contracts and timeshare-related contracts. The maximum quantum for claims under the Act will also be increased from $20,000 to $30,000. Sir, the inclusion of motor vehicle sale contract is timely and much needed. However, the amendments do not adequately address the issue of lemon cars which are new cars with many defects and problems. This is essentially the sale of a fundamentally defective product to a consumer. While the purchase of a car from a car dealer will appear to be covered by the amended Act, the amended prescribed limit of $30,000 is inadequate. It seems arbitrary to me that the purchaser of a very cheap car can get proper redress if it is a lemon

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but not the majority of car buyers. Here, I think it is important to note that $30,000 would be a very low price for a car, even for second-hand cars. It is not clear if lemon car cases are common. But this discrimination does not seem right in principle.

Financial products and services are also being brought under the Act. My first point is that even the amended prescribed limit for claims of $30,000 may be too low for claims in respect of such products and services. By way of comparison, the Financial Industry Disputes Resolution Centre, or FIDReC, hears cases with amounts of up to $100,000 for disputes between insured persons and insurers and $50,000 for other disputes, including disputes between banks and consumers. In fact, from the FIDReC Annual Report for 2006-2007, it seems that financial institutions have voluntarily submitted to FIDReC jurisdiction for disputes over amounts exceeding $100,000, such that the biggest claim adjudicated by FIDReC in its 2006-2007 financial year was actually $729,000. But I am more concerned that, despite what is contained in the Amendment Bill, most financial products and services may end up being excluded from the ambit of the Act. According to the public consultation exercise conducted by the Ministry last year, the Ministry's intent was to exclude from the Act by way of regulations all financial products and services regulated by the Monetary Authority of Singapore. What this means is that even if, today, this House passes the Amendment Bill to include financial products and services under the Act, tomorrow, the Minister may issue regulations that exclude the bulk of such products and services from the Act. I hope that that will not be the case.

Sir, in last year's public consultation exercise, the Ministry stated, and I quote,

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"MAS already monitors the financial services industry closely in its capacity as the regulator. Furthermore, MAS has regulatory and enforcement powers against financial institutions and representatives if they breach MAS' administered laws." While I am sure that the MAS considers the interest of consumers when acting as the regulator, it nevertheless has other priorities as well. Furthermore, the Act contains important features that are absent from the MAS' regime. Consumers have a private right of action against suppliers. There is the voluntary compliance agreement which can include provisions requiring the supplier in question to compensate consumers who have suffered loss or damage resulting from the unfair practice. CASE is also empowered to apply to the court for a declaration or injunction against offending merchants and the decisions of the court are subject to appeal and public scrutiny. These are all essential enforcement mechanisms implemented by the Act but absent from the MAS' regulatory regime. Crucially, many of these features relate to the compensation to consumers.

Sir, we are here today to debate the Consumer Protection (Fair Trading) Act.

Let me repeat: consumer protection. On the other hand, MAS administers a regime to regulate banks and financial institutions. It may be fine for regulating the financial industry, but does it protect consumers? It certainly does not provide for compensation to consumers. Regulation of merchants' behaviour is fundamentally different from compensation to consumers. The Consumer Protection (Fair Trading) Act encompasses both aspects. But the MAS-administered regime provides only for the former and not the latter. After all, if the MAS-administered regime was sufficient to protect the consumers, then why amend the First Schedule to the Act to bring financial products and services under the Act in the first place? It would be highly disappointing if any financial products or

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services are excluded from the Act simply because they are regulated by the MAS. That would render completely pointless the inclusion of financial products and services into the Act. Many believe that Singapore is overly pro-business and too lacking in consumer protection. Such a move would simply prove such views to be true.

Therefore, I hope that the Minister of State will inform this House whether MAS-regulated financial products and services will subsequently be excluded from the Act by way of regulations and, if so, explain why and how such a move will nevertheless benefit and protect consumers.

Sir, my second point relates to clause 3 of the Amendment Bill. It amends the Act so that where a consumer has commenced legal proceedings against a merchant and subsequently CASE or a specified body applies for a declaration of injunction against that merchant, either the consumer or the merchant may apply to the court for a stay of the proceedings, pending the resolution of the application. It seems to me that the supplier is far more likely than the consumer to exercise this right. There are a number of problems with such a mechanism.

Firstly, it seems to me inherently unfair that a consumer's course of action against a merchant who has engaged in unfair practices can be held hostage to a separate application by a specified body. As the saying goes, "Justice delayed is justice denied." I understand that, in most cases, the consumer would already have approached CASE before commencing legal proceedings against the merchant and, obviously, he was not willing to rely on CASE. What happens if the merchant dissipates his assets, pending the resolution of CASE's application? The consumer would then have been deprived of his recourse against the merchant through no fault of his own. If the worry

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is of conflicting outcomes between the consumer's case and the application to the court for an injunction or declaration, then an alternative approach could be to declare that the decision in the consumer's case will not affect and have no precedential value in the other case.

Another approach that is fairer than what is in the Amendment Bill will be to allow only the consumer and not the merchant to apply to the court for a stay of the legal proceedings so the consumer can choose for himself whether or not he would like to wait for the outcome of CASE's application.

The new section 6(9) of the Act is also unfair to consumers. This provision permits the court, acting on its own motion, to discontinue proceedings that have been stayed, if there are no further steps in the proceedings for two years. This is regardless of the status of the application by a specified body for a declaration of injunction. In other words, the stayed proceedings can be discontinued even if the other application drags for more than two years and remains unresolved.

Sir, justice should not be held hostage to the court's desire to clear their docket of outstanding cases, especially where the legal proceedings were stayed through no fault of and against the wishes of a consumer. While the Amendment Bill does specify that the discontinuance is without prejudice to the consumer's right to reinstate the action, it seems to me unfair that the consumer, and even the supplier, should have to bear the cost and inconvenience of effecting a reinstatement.

On a related note, in light of the power of the court to discontinue proceedings if no steps are taken for two years, the Act should require either the court or the supplier to notify the consumer of the outcome of the

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application. The consumer may not be able to monitor the other application and so may not be aware of its outcome and the possible additional steps that he can or should take.

Sir, my third point concerns the Small Claims Tribunal. The amendments will effectively expand the jurisdiction and caseload of the Tribunal. I trust that the Ministry and the Subordinate Courts will ensure that the Tribunal is appropriately staffed and equipped to handle this expansion. I would also like to propose that decisions of the Small Claims Tribunal, at least those in proceedings commenced under this Act, be published. Decisions of the Tribunal are currently not published, so consumers have little guidance as to the relevant factors that the Tribunal will consider when coming to a decision.

I have received some troubling anecdotal feedback about the Small Claims Tribunal.

Firstly, the Tribunal's decisions are inconsistent. The Tribunal also seems to construe "services" very narrowly, as having to require skill and labour. Accordingly, it seems that the Tribunal has ruled that cases, eg, car rental disputes, fall outside its jurisdiction which, in my view, runs contrary to the clear intent of the Act and a purposeful construction of the term "services". I have also been told that some businesses have had so many complaints against them that their representatives before the Tribunal have become extremely experienced, thereby facing lay consumers who may well be appearing in a court setting for the very first time at a severe disadvantage when they appear before the Tribunal.

Sir, I believe in the usefulness of the Small Claims Tribunal where lawyers are

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not allowed and so I support in principle the central role of the Small Claims Tribunal in the Act. However, it seems to me necessary for the Tribunal to publish its decisions or, at the very least, summaries or digests of cases. This will address the criticisms I have mentioned, introduce some important transparency into the process, and provide valuable clarity and guidance to consumers.

Finally, I would like to ask the Minister whether the Act has been effective in preventing what may well be called "serial offending". It is possible for an unscrupulous businessman to set up a business, such as a time-share company, that engages in unfair practices prohibited under the Act. When complaints are lodged against the company and it faces legal proceedings, whether from consumers or CASE, they can simply shut this company down and start a new one and continue preying on consumers. The Act and the amendments do not address this, and I am told that this does happen in practice. Perhaps, in addition to the amendments currently before this House, the Ministry should also amend the Act to apply its mechanisms to the person behind these companies. For instance, section 9 of the Act could be amended such that if CASE applies for an injunction, then the court is explicitly empowered to extend the injunction to apply against the company's directors and shareholders as well, if it is satisfied that such persons have previously been involved in other companies that have engaged in similar unfair practices.

Sir, in conclusion, the Ministry has done well to update the Act to keep it relevant, in light of changing circumstances. Nevertheless, there remains much room for improvement and I hope that the Minister can address the issues I have raised.

With that, I support the Bill.

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5.52 pm

Mr Lee Yi Shyan: Sir, I want to thank the various Members for speaking passionately and giving good thoughtful suggestions as to how the Act can be further enhanced.

Sir, let me first establish the philosophy of the Consumer Protection (Fair Trading) Act that we have here in this country. Unlike the Office of Fair Trading or the Fair Trading Acts in other countries, our Consumer Protection (Fair Trading) Act does not intend to criminalise unfair practices. This is because the more serious offences related to business dealings are already covered by existing legislation. So, aggrieved consumers have actually choices to go to the court and seek civil redress in that manner. The consumer protection framework in Singapore is established to help small and vulnerable consumers.

To put things in perspective, when the Small Claims Tribunal was established in the 1970s, the claim limit was only $2,000. Obviously, from today's discussions here, we know that the amount has been raised successively over the years, and now we are proposing to raise it to $30,000. Still, whether $30,000 is an adequate figure or not to cover a whole host of unfair practices, we have to look at it from the point of view of the small consumers with limited ability to seek redress.

We also have to consider, as Mr Siew Kum Hong rightly pointed out, the capacity of the dispute resolution mechanism. In this case, we have the Small Claims Tribunals as well as FIDReC, the newly designated dispute resolution scheme. We have to look at their capacity and ability to remain focused on small consumers who require help because, if we overload them with too many cases by raising the claim limits ahead of these groups' dispute claim value, we would

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inadvertently be doing a disservice to them rather than helping them.

In short, the consumer protection framework is one that is evolving with time, responding to the pattern and trends of the new types of consumer dispute cases. This is also a fruit, an outcome of the joint work between the Government, the consumer associations, the specified bodies, businesses and the public in general.

Sir, let me now address some of the Members' specific questions.

Mdm Ho has raised the question whether the amount of $30,000 could be raised further. I have answered that. Mdm Ho also raised the interesting point about whether we are making it too onerous for suppliers of services. Unlike the other three Members, her concern is that we are creating too much demand in terms of documentation and compliance which will translate into business costs and, in the end, will pass down to consumers, if we are not careful. I want to assure Mdm Ho that in crafting the provisions, we have seriously taken into consideration the balance between protecting consumers at large and targeting the errant suppliers or traders who, we believe, are a small minority. So, any provisions that we propose should not have a negative impact on the large number of suppliers who are honest and professional.

Mr Yeo Guat Kwang singled out the beauty industry as an example where there have been many complaints. I am sympathetic to the number of consumers who were taken in by persuasive beauticians or consultants who promised them youth and many different kinds of services. But this is a case where the existing CPFTA has provisions, for instance, in the Second Schedule, for consumers to seek redress if there has been a misrepresentation given to the

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consumers, such as a "yes" when it is "no", or a "no" when it is "yes". So, our framework does provide avenues for consumers to seek redress. We do not think at this point that extending the three-day cooling period is necessary to this industry. In fact, the right approach to solving this type of complaints is to strengthen education and promote best practices among the players in the industry.

Mr Yeo also mentioned about the auto-renewal feature, especially in the telecommunications industry. As Members can imagine, thousands of consumers would have their contracts expiring every day, because we have six million mobile users and many other fixed-line subscribers, etc. So, if every single contract has to be renewed without this automatic feature, then we can imagine many consumers suffering from lines dropping and being discontinued. So we are not very sure, in this case, whether we will be doing a service or disservice to consumers by removing this auto-renewal feature. However, we can work with the regulatory agency – in this case, IDA – to also promote best practices

among the telco players to, as Mr Yeo suggested, include some kind of reminder feature so that consumers can make their choice towards the end of their contract.

I want to thank Mr Lim for his support for the proposed amendments in this Bill. I think he asked for three clarifications. The first one is on FIDRec. He asked whether MAS can be designated as its specified body. MAS today regulates a number of financial-related products and services. MAS has supervisory as well as regulatory authorities over the institutions they licensed. Therefore, if they find that financial institutions are in breach of any rules or laws under them, MAS actually is more powerful than a specified body, in a sense, that they can suspend or stop the

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operation of the particular financial institution. Mr Siew Kum Hong also mentioned the seeming contradiction between excluding the financial products and services in the first instance and now including them. The financial products and services were included when the CPFTA was first introduced for good reason. At that time, some of the Acts were very new and they were also to be introduced and in the decision, there were other dispute resolution mechanisms in the financial industry. So it was decided then that it was better for the various mechanisms to function as they were designed to serve consumers and businesses. But having had the experience of the last few years, I think we are ready to incorporate the financial products and services regulated by the MAS and later on to also bring in the other two financial-related products and services under the Ministry of Law. So MAS, therefore, in our view, has already got the power to supervise and regulate the financial institutions under its supervision. So, it is not necessary to specify them as a specified body.

Mr Lim also asked about the opt-out regulations – whether the Ministry intends to issue the opting-out feature. We have observed that the suppliers sometimes send goods and services to consumers without their prior consent and subsequently demand payment from them and as a result, some consumers may mistakenly make payment for such goods and services. And sometimes goods and services may also be provided on a free trial basis with or without the consent of the consumers. So this places a burden on consumers to opt-out from the arrangement. Providing unsolicited goods and services and giving consumers free trials may be an effective marketing tool to raise awareness and allow consumers to try out new products and services. However, this practice should not be used as a means to take unfair advantage of consumers. This is why we intend to

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introduce regulations to allow consumers to treat all unsolicited goods and services as unconditional gifts from suppliers, unless the consumer has acknowledged in writing his willingness to accept and pay for such goods and services.

Now, I want to also touch on Mr Siew's questions on lemon law. This subject of lemon law has been raised before in the previous parliamentary discussions. In our subsequent revision, we would work with CASE to see if introduction of this law would indeed serve the intended benefits of the consumers in Singapore.

With regard to the other suggestion by Mr Siew on improving the effectiveness of the Small Claims Tribunals, we welcome the suggestion and would convey these suggestions to the Ministry of Law because the Small Claims Tribunals belong to the Subordinate Courts system. He also asked whether CPFTA is indeed effective against the serial offenders because some of these may close and re-open businesses. For this kind of situation, indeed, we are working with CASE to see how we can have a better oversight of companies or directors behind the companies who are engaged in these unfair practices with other agencies that have supervision over them.

Mr Siew Kum Hong: Mr Deputy Speaker, Sir, I have a clarification for the Minister of State.

I think the Minister of State has misunderstood my point about the inclusion of financial services and products under the Consumer Protection (Fair Trading) Act.

My point was that last year's public consultation exercise included a set of draft regulations called the Consumer Protection (Fair Trading) (Regulated

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Financial Products and Services) Regulations under which MAS regulated financial products and services were to be excluded from the Act after they had been included in the Amendment Bill. So my question was to ask the Minister of State to clarify whether the Ministry intends to issue such regulations after the enactment of this Amendment Bill.

Mr Lee Yi Shyan: Mr Deputy Speaker, I do not have the answer on this particular point, but I would check and come back to Mr Siew.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Lee Yi Shyan].

Bill considered in Committee; reported without amendment; read a Third time and passed.