***************************************
Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Tanya Chan in the Legislative Council today (April 25):
Question:
It has been reported that the Consumer Council (CC) has started discussions with the beauty industry in 2006 and drawn up a Beauty Industry Code of Practice (CoP) with a view to enhancing service quality of the industry and consumer confidence through self-regulation by the practitioners in the beauty industry. Recently, CC has also published the Report on Unfair Terms in Standard Form Consumer Contract, in which CC recommends that fair terms be adopted and a cooling-off period be provided in standard form consumer contracts (standard contracts) to protect the rights and interests of consumers. In this connection, will the Government inform this Council:
(a) whether it knows the number of complaints received by CC in the past three years regarding the pre-payment mode of consumption, the total amounts of money involved and follow-up results, together with a breakdown by industry (including beauty, fitness and other industries);
(b) whether the authorities will take specific measures to encourage the beauty and other industries to adopt the standard contract proposed by CC so as to tie in with the publicity and promotion campaign of CC; if they will, of the details; if not, the reasons for that; whether the authorities will consider stepping up relevant public education to enable members of the public to know about the latest sample of standard contract released by CC, and encourage them to advocate the use of relevant standard contracts among the traders; if they will, of the details; and
(c) whether at present the authorities will consider incorporating the principles and/or specific terms of CC's CoP into the legal framework for regulating trade practices, and implementing specifically the "Guidelines on drafting standard form consumer contracts for beauty industry" and the cooling-off period arrangement recommended by CC for the pre-payment mode of consumption through enacting legislation; if they will, of the specific arrangements for the legislative study and public consultation concerned; if not, the reasons for that?
Reply:
President,
With a view to encouraging industry self-regulation and protecting consumer rights, the Consumer Council joined hands with industry representatives and prepared a Code of Trade Practices for the beauty industry in 2006. The Code covers various operational aspects of the industry, including assurance of quality of services and goods, promotion and marketing practices, the pre-payment mode of operation, promulgation of performance pledges and arrangements for handling consumer complaints. Earlier this month, the Consumer Council published a Report on Unfair Terms in Standard Form Consumer Contracts, the purpose of which is to encourage and assist traders in avoiding the use of unfair terms. The Council takes the beauty industry as a sample case, and provides a set of guidelines on drafting standard form consumer contracts and a model contract for reference by the industry.
My reply to the various parts of the question is as follows:
(a) The Consumer Council groups complaints generally by major industry. The Council does not keep statistics on the number of complaints and the amount of money involved in cases concerning the pre-payment mode of consumption by industry. To reply to the Member's question, the Consumer Council has examined all case files under the industries that are named in the question (i.e. "beauty care" and "fitness and yoga centres") and "telecommunications" for the past three years. The number of cases involving pre-payment is set out in the following table. As regards the result of follow-up actions, the Council has mediated successfully in around 80 per cent of the cases.
Number of complaint cases involving pre-payment
Year Beauty care Fitness and Telecommunications
yoga centres
---- ----------- ------------ ------------------
2009 1,195 385 6,486
2010 568 775 6,477
2011 606 637 5,251
2012 137 81 1,314
(the first quarter)
(b) According to the Consumer Council Ordinance (Cap. 216), the functions of the Council include collecting, receiving and disseminating information concerning goods, services and immovable property and encouraging business and professional associations to establish codes of practice to regulate the activities of their members. Hence, initiatives to encourage and assist suppliers in avoiding the use of unfair contract terms are within the statutory functions of the Council.
To tie in with the publication of the Report on Unfair Terms in Standard Form Consumer Contracts, the Consumer Council has launched a series of publicity activities, including publishing a promotional pamphlet, hosting a press conference and introducing the major findings of the Report through the CHOICE Magazine and radio programmes. We will continue to liaise with the Council to see if there is a need to assist the Council in its publicity campaign.
(c) The recommendations in relation to trade practices in the Code of Trade Practices for the beauty industry seek to ensure that consumers can make an informed transactional decision with sufficient information and under their free will. Aiming to enhance consumer protection, the provisions on trade practices under the existing Trade Descriptions Ordinance (Cap. 362) and the legislative proposals under the Trade Descriptions (Unfair Trade Practices) (Amendment) Bill 2012 (which is under this Council's scrutiny) are all formulated in accordance with the same principle.
On standard consumer contract, we welcome the Consumer Council's initiative of providing a set of guidelines on the standard consumer contracts for the beauty industry. We hope that the business sector will have regard to the guidelines suggested by the Council in drawing up standard consumer contracts. At present, the Unconscionable Contracts Ordinance (Cap. 458) provides for a range of relief measures for aggrieved consumers who enter into contracts that are found to be unconscionable. It sets out a list of factors for the court to determine if a contract (or part of a contract) is unconscionable, such as the relative strengths of the bargaining positions of the consumer and the other party. Many of these factors are analogous to benchmarks adopted in other jurisdictions for determining if a contract term is fair or not. Together with the Misrepresentation Ordinance (Cap. 284) and the Supply of Services (Implied Terms) Ordinance (Cap. 457), the existing law already accords certain protection to consumers aggrieved by unfair contract terms.
The imposition of a mandatory cooling-off period would affect the business operation of traders and the process in which consumers enter into contracts. During the consultation on legislative proposals against unfair trade practices, stakeholders expressed concerns over the practical arrangements of cooling-off period, such as the arrangements for consumers to exercise the right of cancellation, the refund arrangements and small-value transactions. We need more time to carefully study how to address these concerns properly by legislation. Our current priority is to take forward the Trade Descriptions (Unfair Trade Practices) (Amendment) Bill 2012. We are working closely with the relevant Bills Committee of this Council with a view to completing the scrutiny of the Bill as soon as possible.
Ends/Wednesday, April 25, 2012
Issued at HKT 14:53
NNNN
