ACCC and ASIC Given New Powers to Investigate Unfair Contract Terms

Franchising

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DATE PUBLISHED: January 29, 2019

THE ACCC AND ASIC HAVE BEEN GRANTED NEW POWERS TO INVESTIGATE UNFAIR TERMS IN CONSUMER AND SMALL BUSINESS CONTRACTS.

Historically, the ACCC and ASIC were only able to require a person to provide information relevant to a breach of their relevant legislation.  The inclusion or reliance on an unfair contract term is not currently a contravention of the Competition and Consumer Act. 

Under the Australian Consumer Law, an unfair contract term only provides that a court can declare that a term is unfair and therefore void.  No penalties are attached to the inclusion of an unfair contract term in standard form contracts. 

This is a source of frustration for the ACCC, who have been advocating since last year for changes to the legislation to make unfair contract terms illegal and subject to penalties. 

Under the new rules, the ACCC can now issue information gathering notices when unfair contract terms are suspected.  ASIC can also do the same for consumer or small business contracts regarding financial products or services. 

The existence of these new powers will assist the ACCC and ASIC in deciding whether to pursue businesses for attempting to enforce unfair contract terms contrary to legislation. 

The unfair contract terms rules have applied to small businesses since 12 November 2016. 

From now on, if the ACCC (or ASIC) asks for information from your business about unfair terms, you are required to comply with that request. 

If you have received a request for information from the ACCC or ASIC and require assistance, we can help.

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