The Australian Government is proposing significant changes to the law which, while having benefits, also has the potential to cause uncertainty and risk to organisations that use standard form agreements.
Following on from the Productivity Commission's Review of Australia's Consumer Policy Framework in May 2008 and the subsequent Council of Australian Governments' (COAG) agreement to implement a single national consumer law in October 2008, the Assistant Treasurer and Minister for Competition Policy & Consumer Affairs, Chris Bowen MP, today released An Australian Consumer Law: Fair market – Confident consumers information and consultation paper.
A new Australian Consumer Law
The proposed Australian Consumer Law is aimed at significantly enhancing consumer protection, reducing regulatory complexity for business and encouraging the development of a seamless national economy.
The key components of the policy framework involve:
- A new national consumer law, to be called the Australian Consumer Law, based on the existing generic consumer protection provisions of the Trade Practices Act (TPA) and included as a schedule to the TPA.
- New consumer laws will include:
- provisions which regulate unfair terms in consumer contracts;
- new penalties, enforcement powers and redress options for consumers; and
- a new national product safety regulatory system.
The Australian Government has also proposed that the TPA be renamed the Competition and Consumer Act to "provide greater clarity as to the functions of the TPA and reflect the complementary and mutually reinforcing nature of consumer and competition policy".
It is intended that the Australian Parliament will have passed legislation for the implementation of the Australian Consumer Law by 31 December 2010.
Who is affected?
Organisations providing standard form contracts to consumers on a "take it or leave it" basis should take note. COAG agreed to include provisions in the Australian Consumer Law relating to defining an "unfair" term in a consumer contract as one which "causes significant imbalance in the parties' rights and obligations arising under the contract, and is not reasonably necessary to protect the legitimate interests of the supplier."
In his Media Release today, the Minister stated "the new Australian Consumer Law will allow consumers and the consumer watchdog to take action against contract terms that cause detriment or a substantial likelihood of detriment to consumers. The unfair contract terms regulation will cover standard form contracts like those consumers would be used to signing for their utilities, mobile phones and bank accounts."
Other contexts in which standard form contracts are commonly used include software end user licences, e-commerce and internet services, online auctions, airline, bus and rail transport services, subscription television and magazine services, and health and fitness centre memberships.
Public submissions
The Minister has invited interested parties to submit comments in response to the Paper by 5pm, Tuesday 17 March 2009. A copy of the Paper and submission guidelines are available on the Treasury website.
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