AGA Gas Industry Forum Suppliers’ Obligations and Liabilities The Role of Quality Assurance & Control Neville Matthew, General Manager of Consumer Product Safety Glenn Probyn, Director of Inspections, Audits & Cases 24 November 2016
This session will cover: Suppliers’ obligations • Liabilities of manufacturers and importers • Gas appliance recalls • Quality assurance and control • Role of product safety service providers •
Who is responsible for product safety? Australian Consumer Law: suppliers are responsible for • supplying safe, compliant products of acceptable quality Any person or corporate body that supplies consumer goods in • trade or commerce is a supplier , including: importers – manufacturers – agents and distributors – retailers – on-line traders – ALL entities have a role to play • and are LEGALLY RESPONSIBLE
Mandatory safety & information standards Presently there are: • 41 enforceable mandatory standards – 22 bans of unsafe products – Penalties : • Criminal offence – $220,000 for an individual – $1.1 million for a corporation – Potential civil penalties for the same amounts – Offence of strict liability – Court enforceable undertakings, injunctions – Costly product safety recalls (voluntary or compulsory) • Brand and reputational damage •
Voluntary Recalls A voluntary recall occurs when the supplier of a consumer good initiates • a recall and voluntarily takes action to recover or repair the supplied goods The ACCC in coordination with state & territory regulators may also • negotiate a voluntary recall of a gas appliance following a safety assessment of the goods The Australian Consumer Law requires suppliers that are voluntarily • recalling products to notify the Commonwealth Minister (currently the Minister for Small Business) in writing within two days of initiating the recall. A penalty can apply for failing to notify the Minister The notice must include certain information: a statement that the • consumer goods are subject to a recall; the nature of the defect; and the dangerous characteristic of the consumer goods. (ACL, s.128)
Compulsory Recalls Section 122 of the Australian Consumer Law empowers the • Commonwealth Minister (or the relevant state/territory Minister) to issue a recall notice to a supplier to recall consumer goods The Minister’s recall notice will stipulate the manner and • timing of the recall Suppliers of consumer goods being compulsorily recalled have • the opportunity to request a conference with the ACCC unless the recall is being conducted without delay (CCA, s.132J)
Growth in Australian recalls of consumer goods Year-on-year growth (based on financial years) of recalls monitored by the ACCC 350 300 250 200 150 100 50 0 2012-2013 2013-2014 2014-2015 2015-2016 • 670 recalls reported to ACCC in FY 2015-16 • 315 recalls directly monitored by ACCC during FY 2015-16
Australian recalls by category Recalls of electrical and gas appliances more than doubled • between FY 2014 and FY 2015
Gas appliance recalls (2016) Bosch Freestanding Gas/Electric Cooker 60cm – Adaptor between the gas supply and the appliance may crack causing a gas leak. 4 October 2016 Real Flame LS1000 and LS1600 Gas Space Heater - Abnormal wear of the fan may generate excessive surface heat as a result of reduced fan speed and cause a fire. 6 July 2016 Sitro Group Australia Gasmate Butane Fire Lighter – When the torch is engaged with the gas cartridge as detailed in the manufacturer's instructions a gas leak may occur. 3 June 2016 AHM Twin Portable Butane Stove – O-rings or seals may be defective and the gas cartridge misaligned, resulting in a gas leak and fire. 13 May 2016 SMEG Built-In Barbeques – Gas feeder pipes may corrode, causing a gas leak and explosion. 30 March 2016 Super Retail Group Campmaster & Wild Country Portable Butane Cartridge Stoves – O-rings and control knobs have failed prematurely, causing gas leaks 24 March 2016
Portable Butane Gas Cooker Recalls (2015-16) Portable Butane Gas Cooker Recalls (2015-16) In 2015 state and territory gas regulators issued safety warning notices • and bans in respect of more than 70 portable butane gas cookers Certification for the cookers was withdrawn due to a faulty back-up safety • release mechanism for the gas canisters, which failed to operate when the cookers overheated Multiple recalls of cookers with faulty over-pressure valves (the primary • safety mechanism) were also announced Ban on sale of butane cookers after Casino death The Tourism News, March 2016
Defective goods regime – suppliers’ liabilities A good has a safety defect if it does not meet the level of safety • the public is generally entitled to expect This applies to all consumer goods - not just those subject to a • mandatory safety standard or ban Determined by a Court on a case by case basis • Consumers can seek compensation from a manufacturer for: • injuries or death (including if they are dependents of the injured or – deceased party) economic loss caused by damage to another good, land, or building – The Court will decide how much compensation is due • Importers of goods manufactured overseas are responsible • under the DGR
Penalties for supplying unsafe products ACL provisions for misleading and deceptive conduct and implied • or express misrepresentations as to the safety of goods (including goods not subject to a mandatory safety standard or ban) Federal Court decision in 2016 against a major retailer for supplying • unsafe private label products: Deep fryer (handles fell off causing hot oil burns to two customers, Mandatory Report – not submitted to ACCC for first serious injury) Stepping stool (not capable of supporting rated load capacity, fractured vertebra) – Drain cleaner (caps flew off when bottles fell over, ‘child proof’ cap ineffective, burnt – baby necessitating skin graft surgery, permanent eye damage to adult male, chemical burns to other customers) Safety matches (heads exploding and igniting the whole box) – Padded chair (not capable of reliably supporting rated load, head injury) – Penalty and Court Orders: • $3 million for misleading and deceptive conduct – – $57,000 for failure to report serious injuries to ACCC Court enforceable undertakings relating to improved compliance – system , annual QC process audits, staff training , etc
‘Quality Fade’ ‘Type tests’ of gas appliances are required for safety approval by • the AGA or other independent certifiers Tests performed for approval purposes do not guarantee safety • or compliance of future production samples ‘ Quality fade ’: The deliberate and secret habit of widening profit • margins through a reduction in the quality of materials. There are real challenges to successfully take • legal action in China In 2001 the CPSC reviewed nearly 200 recalled • electrical products from China; 25% had been approved by an international third-party testing agency such as Underwriters Laboratories (UL), Intertek Testing Services, etc Paul Midler, Poorly Made in China
Quality Assurance & Control Basic elements of a Quality Management System: Independent periodic ‘type testing’ to mandatory safety standards • In-house QA assessments of goods (e.g. checking safety valves) • Compliance folders with manufacturer’s safety certificates, ‘type test’ • reports, product specifications, test reports for raw materials, safety- critical components, etc Factory safety audit reports (to AS/NZS ISO 9000 or equivalent) • Pre-shipment inspections — preferably by an independent service • provider (e.g. ITS, SGS, TUV) Periodic assembly line inspections (where practical) or reports of • manufacturer’s internal audits Internal staff training in Quality Management, Australian Consumer Law, • Safety Regulations, etc
Pre-shipment Inspections Vital component of supply chain management • Shipments can be inspected cheaply worldwide (approx. $200) • Client receives a PSI report listing non-conformities with detailed • images showing any defects and an image of the produced goods in cartons (usually evidencing at least 80% completed production) Released for shipment from factory if report records PASS result • or only when client is satisfied and approves shipment Provides opportunity for goods to be rejected before payments • are made, or for goods to be ‘reworked’ if possible Client can allow service provider to apply a generic ‘inspection • protocol’ or forward a customised protocol for use during PSI Protocols are based on mandatory safety standards, • manufacturer’s specifications, and client’s requirements for ‘quality’.
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