On 28 November 2019, the Government introduced legislation in line with the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The legislation is designed to provide further protections for consumers and small businesses and is set to be passed in early 2020. Below is an overview of the proposed legislation.
Click here for a recap of the Banking Royal Commission from our Head of Class Actions, Ben Hardwick.
Under the proposed legislation, mortgage brokers will be required to act in the best interests of consumers when providing credit assistance. That means where there is a conflict of interest between the consumer’s interests and the mortgage broker’s interest, the mortgage broker must put the consumer first. Furthermore, mortgage brokers will be prevented from accepting conflicted remuneration. These changes will apply from 1 July 2020.
Funeral expenses policies
The Royal Commission uncovered evidence of vulnerable consumers losing out on funeral expenses policies which proved insufficient or inappropriate for their needs, due to the poor sales tactics of some policy providers. To prevent this, the new legislation makes clear that consumer protections which exist under the Australian Securities and Investment Commission Act 2001 apply to funeral expenses policies. For example, consumers will be protected if their insurer acts in an unconscionable or oppressive manner. These changes will apply the day after the legislation is approved.
Standard insurance contracts
The law currently protects consumers and small businesses from unfair contract terms in standard form contracts, however, standard form insurance contracts are excluded. If the legislation is passed, this exclusion will be removed from 5 April 2021. Consumers and small businesses will benefit from this change as they will be able to ask a court to declare that a term of a standard form insurance contract they have entered into is invalid. When a court makes a declaration, the unfair term can no longer be enforced.
This is important because insurers will no longer be able to use unfair terms to limit or avoid performing their obligations.
How we can help
If you are involved in financial dispute, Slater and Gordon can help you by:
- Advising you of your rights as a consumer or small business
- Assisting you to negotiate a resolution with your mortgage broker or insurer
- Representing you in any mediations or legal proceedings
You can learn more about our commercial litigation services here, or if you have an enquiry about a financial dispute, you can submit an online enquiry