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ASIC circulates information for UCT reforms

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The Australian Securities and Investments Commission (ASIC) has released information sheets on new unfair contract term rules and is undertaking “targeted supervisory work” as it prepares for the start of the controversial laws.

The information sheets outline the new regime for consumers and small businesses, including when the rules apply, what makes a term unfair and what options are available to pursue issues.

ASIC says it is also working with the insurance industry to gauge how insurers are tracking and to discuss terms that may raise concerns in the lead up to the April 5 start of the laws, which continue to face criticism.

Insurance Council of Australia Head of Regulation Policy John Anning told an Australian and New Zealand Institute of Insurance and Finance webinar last week that the history of unfair contract term protections for insurance is “a textbook example of how not to develop public policy”.

“There will be consumer benefits when the protections commence,” he said. “However, there will also be serious unintended consequences, particularly in relation to commercial insurance policies.”

The regulator’s focus includes terms that allow cash settlements based on the cost of repair to the insurer, terms that are an unnecessary barrier to a claim being lodged and terms that reduce the cover offered where compliance with preconditions is unfeasible.

ASIC has also highlighted the use of outdated medical definitions that may be inaccurate or restrictive.

The unfair contract term reforms are part of a raft of changes that follow the recommendations of the Hayne royal commission.