Submission: Australian Consumer Law – draft unfair contract terms provisions

Consumer Action strongly supports national unfair contract terms regulation. We consider that the draft legislation in the Paper largely reflects the policy intent previously communicated by the Ministerial Council on Consumer Affairs and the Council of Australian Governments. However, there are some instances in which we recommend changes and these are set out below.

More importantly, the draft provisions in the Paper do not include any provisions that would enable the regulators to take their own legal action to prevent the inclusion or use of an unfair term in a standard form contract, as opposed to action on behalf of a consumer or consumers and as opposed to action to prevent the inclusion or use of a ‘prohibited term’ prescribed under the legislation. We understand that it is proposed to address these powers in a separate section of the Bill (which has not been released for comment). Clearly, it is difficult to comment on the effectiveness of what is proposed given its absence from the current draft. For present purposes we must therefore simply make it clear that we do not support the proposed unfair contract terms law unless such provisions are found in the final Bill, as otherwise the law simply will not be effective.

For conciseness, when discussing issues below that are common to both sets of draft provisions, we refer only to the provisions of the draft Trade Practices Amendment (Australian Consumer Law) Bill 2009: Unfair and prohibited contract terms. However, our comments apply equally to the mirror provisions set out in the draft Trade Practices Amendment (Australian Consumer Law) Bill 2009: Unfair and prohibited contract terms relating to financial services etc.

To read our submission, click here: Australian Consumer Law – draft unfair contract terms provisions.

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