On 7 March 2023 Australian Competition and Consumer Commission (ACCC) Chair Gina Cass-Gottlieb said in a speech to the Committee for Economic Development of Australia:
“In anticipation of the new provisions, we are undertaking a review of business terms and conditions across a number of different sectors. This proactive review will be used as a basis for future enforcement cases.”
The new regime for unfair contract terms will take effect on 9 November 2023.
The government delayed the implementation of the amendments of 9 November 2022 to allow time for the review and redrafting of contracts to remove any unfair contract terms. For an outline of the new regime including the penalties that will apply click here. For our quick guide to assess whether any term is an unfair contract guide click here.
On 5 April 2021 the unfair contract term provisions were expanded to include insurance contracts. On 3rd April 2023 ASIC announced that it was taking action against Auto & General Insurance Company Ltd (Auto & General) for breaches of the unfair contract terms. We note that this is the first enforcement action following the 5 April 2021 amendment
In the proceedings ASIC alleges that a term in the insurance policy that provides that an insured must notify Auto & General “if anything changes about your home or contents“ is an unfair contract term.
ASIC alleges:
- that an obligation to notify of “anything“ cannot reasonably be met
- that the obligation is unclear regarding what must be disclosed
- that is is confusing and misleading and suggests that Auto & General has a wide discretion to refuse claims.
ASIC also alleges that the term is an unfair contract term within the meaning of s12BG of the ASIC Act, in particular:
- that the term demonstrates a significant imbalance between the parties
- that the term is not reasonably necessary for the protection of Auto & General
- that if the term were relied on it would cause detriment to the insured.
For assistance in the review of contract terms please contact Peter Jackson in our Sydney office or Sotheary Bryant and Peter van Rompaey in our Melbourne office.
