The Australian Securities and Investments Commission (ASIC) has updated its information sheets on unfair contract terms, protections for consumers and small businesses.
In a statement, the Commission said the protections would be extended to insurance contracts following the enactment of the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020.
It said the information sheet for consumers (INFO 210) and the information sheet for small businesses (INFO 211) now provided guidance about how the unfair contract term protections are to apply to insurance contracts from 5 April 2021.
“In preparation for the unfair contract term protections applying to insurance contracts, ASIC is undertaking targeted supervisory work with industry,” the Commission said.
“ASIC has been working with industry groups and insurers to gauge how insurers are tracking in the lead up to the new protections commencing, and to help inform industry about those new obligations,” it said.
“This includes discussions about potential contract terms which may raise concerns under the unfair contract terms protections.”
ASIC said the focus of the Commission’s supervisory work was on terms that allowed an insurer to cash settle a claim based on the cost of repair to the insurer; terms that were an unnecessary barrier to a consumer lodging a claim; terms that reduced the cover offered where compliance with the preconditions was unfeasible; and terms that used an outdated, and therefore inaccurate or restrictive, medical definition.
The Commission said it would continue to engage with industry in the lead up to the commencement of the new laws.
ASIC’s updated information sheet on unfair contract terms for consumers can be accessed at this PS News link and for small businesses at this link.
