Consumer Council

Established in 1974, the Consumer Council is a statutory body charged
with the responsibility for protecting and promoting the interests of
consumers of goods, services and immovable property. Its chairman,
vice-chairman and 20 members are appointed by the government from a
wide cross-section of the community. The council forms committees and
working groups to deal with specific consumer-protection tasks.

The council's office is headed by a chief executive with a staff of 114. It
has seven functional divisions: administration, complaints and advice,
information and publication, legal affairs, research and testing, survey and
trade practices. The council's activities range from developing new
consumer protection initiatives to conducting studies on the state of
competition and trade practices of various business sectors. It mediates in
consumer disputes, disseminates information and advice and organises
consumer education activities. It also tests products, conducts in-depth
studies and surveys and studies and responds to consultation papers and
reports on consumer-related issues.

Following the publication at the end of 1996 of its report, Competition
Policy: the Key to Hong Kong's Future Economic Success, the council
carried out an extensive programme of meetings with trade associations
and other representative bodies, to brief them on the findings of the report
and its recommendations. The report concluded that Hong Kong needed a
comprehensive policy and related legislation to promote fair competition.
The council recommended enacting a competition law to tackle horizontal
and vertical collusive agreements and abuse of a dominant position. It
proposed establishing a Competition Authority to investigate possible
breaches of the Law and an Appeal Body to hear appeals against decisions
by the Competition Authority. The report also recommended action to
promote an understanding of the aims of competition policy within
government and among the business community and the general public.

The government responded in November 1997 and accepted the council's
recommendation to adopt a comprehensive competition policy. It will
issue a clear policy statement on competition and require all bureaux to
give due regard to the competition angle in setting new policies or
reviewing existing ones. It will also request all bureaux and departments to
submit new initiatives for promoting competition. The Consumer Council
will continue to monitor and review trade practices in the private sector
and direct more efforts to help businesses draw up codes of
pro-competition practices. The Financial Secretary will chair a
Competition Policy Advisory Group to co-ordinate the government's
policy in this area. However, the government does not believe an
all-encompassing competition law is appropriate at this stage of Hong
Kong's economic development.

The council also continued to follow up its report, How Competitive is
the Private Residential Property Market?, published in July 1996, and
published a supplementary report in January 1997 addressing concerns
that developed in late-1996 over a spate of property speculative activities
through shell companies and 'chip trading'. It recommended that
developers should require applications from companies to specify the
name of the beneficial owners and directors and that developers should
not allow any owner more than one application. It also recommended
prohibiting changes in the beneficial ownership of companies that were
successful in a ballot.

The government's response to the council's reports on property was
released in May 1997. It accepted 18 of the council's 21
recommendations, including: supplying lots of appropriate size in land
auctions, improving efficiency of the development mechanism, publishing
medium-term land disposal programmes, rezoning more industrial areas
for residential purposes, improving accuracy of estimates of housing
supply, requiring developers to sell flats within a specified period to
facilitate housing supply, devising a recognised building-certification
programme and facilitating the release of developer's land banks for
housing. The three recommendations rejected were: the setting up of a
framework for specialised mortgage agencies, extending anti-speculation
measures to non-consent scheme developments and opening more
opportunities for and favouring small developers in housing developments.

The council also published a report, Car Parking in Private Residential
Developments, in August. This report was concerned with trade practices
arising from complaints on the sale of blocks of car parking spaces to
non-residents without residents being given sufficient opportunities to buy
and on alleged changes in rental arrangements without adequate notice.
The council recommended that land grants should include a requirement
that only owners might buy spaces and only owners or occupiers might
rent spaces if they were not for sale. It also recommended that managers
and incorporated owners should be empowered to enforce conditions in
land grants relating to use. Some of the provisions in the Landlord and
Tenant (Consolidation) Ordinance should also apply when use was
granted by way of a separate tenancy agreement or a licence.

To address the problem of limited disclosure, the council recommended
that land grants, building covenants and pre-sale consent conditions
should include a requirement for disclosure of the location, size and price
of the carparks. Adequate notice should be given for disposal of carparks
previously leased out. The council also called on the Real Estate
Developers Association to devise a code of practice in respect of both
sale and management of car parking spaces.

In response, the Lands Department undertook a review of the standard
lease conditions covering parking and, by the end of the year, had agreed
to incorporate suitable amendments in all future residential grants which
would restrict the alienation of carparking spaces. With respect to
improving the problem of limited disclosure, the Housing Bureau was
considering the introduction of legislation requiring the disclosure in the
sales brochure of the number of car parking spaces for sale and for rent.

During the year, the Consumer Legal Action Fund, established in
November 1994, initiated its first litigation action for the recovery of
payments made by a group of eight complainants to a modelling agency.
The fund is part of the council's dispute resolution mechanism. It aims to
offer assistance to aggrieved consumers whose complaints cannot be
amicably resolved, to seek redress in court. The fund has satisfactorily
resolved most cases without having to go to court. Since its
establishment, the fund has considered 14 groups of cases; the number
of complainants involved in each group varied from one to over 30. Five
groups of cases have been assisted, of which three were successfully
settled out of court and two were being pursued in court. One of the
remaining nine groups was settled by the complainants while under
consideration; two were denied assistance; four could not be processed
as the matters did not develop further and two were being processed by
the fund.

The council continues to organise educational activities to enhance public
awareness of the legal rights afforded under a growing body of consumer
protection legislation. Additional legal protection is in the pipeline. Two
sub-committees of the Law Reform Commission, on which the council is
represented, have issued consultation papers dealing with civil liability for
unsafe products and sales description of overseas uncompleted residential
properties.

During the year, the council responded to more than 245 000 consumer
enquiries and processed 11 500 consumer complaints including 796
complaints from tourists. The settlement rate of consumer complaints
stood at an average of 85 per cent of justifiable cases. The council also
organised about 280 consumer educational activities at district level
through its 16 consumer advice centres as well as publicity campaigns on
such consumer concerns as sustainable consumption and reduction in the
use of plastic shopping bags, etc.

In 1997, CHOICE maintained an average monthly circulation of 25 000
copies. It was a regular source of consumer information to the public and
provided a stimulus for media coverage on a wide range of consumer
issues and concerns. The council conducted 34 product tests, 55 in-depth
studies and 15 survey projects with a view to collecting independent and
impartial information to assist consumers to make the right choice. Some
tests were conducted specifically in response to the enactment of new
legislation on product safety.

The council works closely with the government through the Trade and
Industry Bureau, and trade and professional bodies and was increasingly
consulted on major policies affecting the interests of consumers such as
the abolition of scale fees for conveyancing and copyright issues. The
council, as an executive and council member of the Consumers
International (CI), maintains regular contacts with its counterparts in the
Mainland of China and overseas. At the 15th World Congress of CI held
in Santiago, Chile, in November, the chief executive of the Hong Kong
Consumer Council was elected CI's president for a three-year term. This
reflects the world-wide recognition of the council's work in the protection
and promotion of consumer interests.

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