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Industry 'must prepare for UCT reform'

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Insurance companies should be getting ready for the extension of unfair contract terms (UCT) obligations, the Australian Securities and Investments Commission (ASIC) says.

UCT laws will apply to insurance contracts from April 5 following the passage of the Financial Sector Reform Bill in Federal Parliament last year. While the Federal Government deferred implementation of a number of Hayne royal commission reforms, the delay does not extend to the UCT changes.

Last week the Federal Court of Australia declared several terms within six small business loan contracts used by Bendigo and Adelaide Bank to be unfair, following an ASIC investigation.

Commissioner Sean Hughes says the judgment shows ASIC will take “the necessary steps” to enforce the law.

“Importantly, insurance firms should be preparing to extend these obligations in insurance contracts.”