The proposed Australian Consumer Law (see here) has specific implications for national financial services laws.
The Government has provided a commitment to maintain consistency between the Australian Consumer Law’s generic provisions and the consumer (or investor) protection provisions in credit and financial services laws, to the extent that it is practicable to do so.
The financial services laws are currently the subject of a reform process including the establishment of uniform national laws for the regulation of consumer credit.
Nevertheless there will be an overlap between the 2 sets of laws, especially in the area of unfair contracts.
Unfair contract terms are those that cause a significant imbalance in the parties’ rights and obligations arising under a contract and are not reasonably necessary to protect the legitimate business interests of the supplier. They are prevalent in standard form contracts.
The consultation paper lists banking and financial services, including credit agreements, as examples of contracts that may be affected.
Particular unfair terms that will be banned include:
- Unreasonable flat/fixed early termination fees and those requiring the paying out of the contract; and
- Terms requiring consumers to pay more than suppliers’ reasonable enforcement costs reasonably incurred.
A Bill is expected to be drafted by June 2009 with commencement on 1 January 2010.