ASIC's 2018 review of certain lending contracts in the banking sector, Report 565: Unfair contract terms and small business loans, identified a number of contract terms that may be likely to contravene the UCT regime. The Federal Court of Australia yesterday declared several terms within six small business loan contracts used by Bendigo and Adelaide Bank to be unfair. Consistent with the Hayne Royal Commission recommendation, the Bill applies a broad scope to the test, and it has been fit within the terms of the existing ASIC Act provisions with very little tailoring. Those provisions now render void unfair terms in many consumer and (from 2016) small business standard form contracts, but do not apply to many insurance contracts as a result of section 15 of the Insurance Contracts Act 1984 (ICA). The unfair contract terms regime under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) applies to the provision of financial services, including small business contracts, consumer contracts and contracts for credit activities. Treasury released an exposure draft Bill 1 on 30 July 2019 to extend unfair contract terms to insurance contracts. These are contained in sections 23 to 28 of the Competition and Consumer Act 2010 (ACL) and, in respect of financial products and services, sections 12BF to 12BM of the Australian Securities and Investment Commission Act 2001 (ASIC Act).From 12 … From that date, Section 15 will no longer protect new or varied contracts of insurance which the Act governs, from relief relating to the effect of section 12BF (unfair contract terms) of the Australian Securities and Investments Commission Act 2001. These laws take effect in April 2021, and apply to insurance contracts issued or … The ability for third party beneficiaries and parties of the insurance contract to challenge an unfair term in the contract. Unfair contract terms protections have been extended to include standard form small business insurance contracts entered into or renewed from 5 April 2021. Introduction On 5 April 2021, a fundamental change to the Insurance Contracts Act 1984 (Cth) commences. Unfair Contract Terms and Insurance Contracts: Further Reforms and ASIC Guidance King & Wood Mallesons Australia November 11 2020 Further reforms to legislation concerning unfair contract terms. Amendments to the Insurance Contracts Act 1984 (Cth) (ICA) will allow the current unfair contract terms regime in the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) to apply to insurance contracts subject to the ICA from 5 April 2021. The draft Bill extends the UCT regime to insurance contracts. The Australian Securities and Investment Commission (ASIC) has released information sheets on the application of unfair contracts laws to insurance contracts. The Australian Securities and Investments Commission (ASIC) has warned insurance companies to prepare for upcoming unfair contract terms reform, after securing a court victory over a bank. 2. Forums. Since 2010, Australia has had laws dealing with unfair contract terms (UCT Laws) in consumer contracts. Unfair Contract Terms Laws are about to change from 5 April 2021 to include insurance contracts, and also significant penalties for the usage of unfair terms. Although the UCT laws apply to most financial products and services regulated by the Australian Securities and Investments Commission Act 2001 (ASIC Act), they do not currently apply to insurance contracts regulated under the Insurance Contracts Act 1984 (Insurance Contracts Act). If a term of an existing contract is varied on or after 5 April 2021, the protections will generally apply to that term but not the rest of the contract. Leverage the vast knowledge and experience of your global in-house peers

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