The National Insurance Brokers Association (NIBA) has urged members to act on legislation that extends unfair contract terms protection to small businesses.

The new laws, which are relevant to brokers with small business clients, apply to standard-form contracts entered into or renewed from November 12.

The Australian Securities and Investments Commission (ASIC) has issued guidance on the changes.

“If any standard-form terms of engagement with your client are found to be unfair, the clause will be void and of no effect,” NIBA says.

“Courts will be able to make orders against a business that seeks to rely on an unfair term of a contract, and ASIC will also have powers to intervene if it feels a business is using unfair terms in its contracts with its clients.

“NIBA strongly recommends all members review their standard-form contracts of engagement with their small business clients, preferably with the assistance of their preferred legal adviser.”

Insurance contracts are effectively excluded from unfair contract term provisions because they come under the Insurance Contracts Act.

However, insurance contracts not regulated by that Act – such as marine insurance, which is regulated under the Marine Insurance Act – will be affected.

The Insurance Council of Australia made submissions last year highlighting the problems this could cause the marine insurance industry, including increased uncertainty and rising premiums and reinsurance charges.