Australia: What do changes to Unfair Contract Terms (UCT) laws in Australia mean for financial services?
By: Jim Bulling
Expanding both the scope of the UCT regime and regulator enforcement powers
On Wednesday 9 February 2022 a bill was introduced to Parliament which seeks to amend the Australian Consumer Law and the Australian Securities and Investments Commission Act (ASIC Act) to extend the Unfair Contract Terms Regime (UCT Regime).
Section 12BF of the ASIC Act currently prohibits unfair terms in standard form consumer and small business contracts as they relate to financial products and financial services.
Under the proposed changes, the UCT regime for small businesses under the ASIC Act will apply where the upfront price of the standard form contract (price threshold) does not exceed AU$5 million and one party to the contract is a business that either employs fewer than 100 people (employee threshold) or has an annual turnover of less than AU$10 million. These changes substantially expand the current law where the price threshold is AU$300,000 (or AU$1 million in a multiyear contract) and the employee threshold is 20 people. As such, the changes are likely to cause the UCT regime to apply to many more financial services business to business contracts.Read More