On 25 June 2009 the Federal government introduced the
National Consumer Credit Protection Bill 2009 into the
House of Representatives. The bill is designed to protect consumers
from unfair terms in standard form contracts.
Initially the bill was to apply to companies, individuals and
consumers in relation to consumer credit and business-to-business
transactions. Standard form contracts are used extensively by
credit providers and business operators and in most cases the other
party has no effective opportunity to negotiate its terms. It was
proposed that a test for unfairness be applied to the terms of the
The bill's introduction into parliament was followed by an
announcement by the Consumer Affairs and Small Business Minister
Craig Emerson that the new bill would not apply to
Whilst this may appear to be good news for businesses, the
government has not given up on this issue. The bill has been
referred to the Senate Economics Committee for reporting on 7
August 2009, in time for the spring session of parliament which
commences on 10 August 2009. Mr Emerson has asked that the
unconscionable provisions of the Trade Practices Act 1974
(Cth) be investigated in relation to standard form contracts used
in business transactions.
In fact, in Victoria, the government has passed its own version
of the consumer protection laws even though it is aware of the
Federal government's proposals to regulate unfair contracts
Australia wide. On 10 June 2009, the Fair Trading and Other
Acts Amendment Bill 2009 received royal assent and the changes
made to the Fair Trading Act 1999 (Vic) came into effect
on the following day.
Part 2B of the Fair Trading Act 1999, involving unfair
contract terms, applies to consumer credit contracts. Its
implementation means that:
unfair terms in consumer credit contracts are void;
the current "good faith" aspect of the test is
removed, resulting in a new test for unfairness being based on
whether, in all the circumstances, a term in a consumer contract
causes a significant imbalance to the detriment of the consumer;
if any terms in the standard form consumer contract are
"standard" (not being subject to negotiation) they will
be unenforceable from the time that they are standardised.
In Victoria credit providers should immediately review their
standard form consumer contracts.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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