In our November 2022 edition of Fundamental, we flagged reforms to unfair contract laws aimed at providing greater protections for consumers and small businesses entering standard form contracts. While the reforms do not come into effect until 10 November 2023, unfair contract terms continue to be a key focus area for ASIC.

In its first court action relating to unfair contract terms in an insurance contract, ASIC has now commenced proceedings against insurer Auto & General Insurance Company over an unfair contract term contained in a PDS. In this article, lawyer Sarah Sherman provides a summary of ASIC's allegations against Auto & General.


Auto & General provides home and contents insurance via a PDS offered through Budget Direct, Australia Post, ING, Catch, Virgin, and Qantas. The PDS was published on Auto & General's website from 1 March 2021 with approximately 1,378,000 consumers having entered insurance contracts on that basis.

A key term of the PDS was that customers were required to notify Auto & General 'if anything changes about [their] home or contents'.


ASIC alleges the term is unfair within the meaning of the ASIC Act because it would cause a significant imbalance in the parties' rights and obligations to each other under the contract. ASIC said the term-

  • imposes an onerous obligation on the consumer to notify Auto & General of 'anything' that changes about their home or contents
  • is ambiguous and unclear as to what needed to be disclosed
  • suggests Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the consumer does not meet the notification requirement, and
  • could mislead or confuse the consumer as to their rights and obligations under the contract.

ASIC said Auto & General does not have a reasonable need to be notified if anything changes, or alternatively, could have included a clearer term with the same legal effect. ASIC is seeking court declarations the term is void, as well as injunctions and corrective orders.

ASIC Deputy Chair Sarah Court said:

contract terms need to be proportionate, transparent and clear, so any obligations are easily understood and able to be realistically adhered to by customers. They must accurately describe the actual rights and responsibilities of the parties under the contract.


The claim against Auto & General is the latest in unfair contract term protection for consumers by ASIC and serves as a reminder to companies that ASIC continues to keep a watchful eye over the use of standard form contracts. While broad ranging terms may be attractive to businesses, they run the significant risk of falling foul of the regime.

If they have not already done so, companies should review their standard form contracts to ensure they do not contain any unfair contract terms and avoid facing action by ASIC. This should be done as soon as possible, but at the latest before the reforms commence on