AGA Gas Industry Forum Suppliers Obligations and Liabilities The - - PowerPoint PPT Presentation

AGA Gas Industry Forum

Neville Matthew, General Manager of Consumer Product Safety Glenn Probyn, Director of Inspections, Audits & Cases

24 November 2016

Suppliers’ Obligations and Liabilities

The Role of Quality Assurance & Control

This session will cover:

• Suppliers’ obligations
• Liabilities of manufacturers and importers
• Gas appliance recalls
• Quality assurance and control
• Role of product safety service providers

• 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 –

• n-line traders
• ALL entities have a role to play

and are LEGALLY RESPONSIBLE

Who is responsible for product safety?

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

• 670 recalls reported to ACCC in FY 2015-16
• 315 recalls directly monitored by ACCC during FY 2015-16

50 100 150 200 250 300 350 2012-2013 2013-2014 2014-2015 2015-2016

Year-on-year growth (based on financial years)

• f recalls monitored by the ACCC

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
• r 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
• r 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
• r 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’.

• Inspections are based on standards for random sampling procedures for

‘inspections by attributes’ ISO, ANSI, MIL, etc

• Inspection Level (I, II, III or ‘special’) - dictates the number of samples

selected at random and can be determined by the client (level II is most usual) – Level III requires the most samples to be selected and hence results in the greatest ‘confidence level’ (slightly more expensive)

• AQL (Acceptance Quality Limit) - determines how

many samples the client will allow to be defective – Usually zero ‘safety-critical defects’, a small number

• f ‘major defects’ (e.g. functionality issues), and a

larger number of ‘minor defects’ (e.g. cosmetic issues)

• The client can set the Inspection Level and AQL or

leave it to the service provider to decide based on usual practice

PSI Reports

Product Safety Tips

• Suppliers can reduce their risk of supplying defective appliances and

injuring consumers by:

• Engaging continually with upstream suppliers about safety
• Developing positive relationships with suppliers,

certifiers, PSI service providers, test houses, and regulators

• Taking ownership of compliance and product development
• Conducting in-house assessments and keeping compliance

files

• Commissioning pre-shipment inspections and carefully

scrutinising PSI reports (preferably based on their own protocols)

• Auditing their product ranges by selecting appliances or

safety-critical components for periodic ‘type testing’

• Investigating customer complaints and assessing potential

problems

• Recalling goods promptly if a hazardous systemic defect is

identified

• Reporting serious injuries to the ACCC if Mandatory

Reports are warranted

• Australasian Compliance Institute (ACI): www.compliance.org.au
• Joint Accreditation Scheme of Australia and New Zealand (JAS-ANZ): www.jas-anz.org
• National Association of Testing Authorities Australia (NATA): www.nata.com.au
• Product Safety Australia: www.productsafety.gov.au
• SAI Global: www.saiglobal.com
• Standards Australia: www.standards.com.au

Further information